AFIA pledges higher industry standards following ASIC motor finance review

Australian Finance Industry Association (AFIA) has reaffirmed its commitment to raising standards across Australia’s motor finance sector following the publication of Australian Securities and Investments Commission’s (ASIC) final report into motor finance lending practices.

The industry body said it supports strong customer protections and robust regulatory oversight, acknowledging ASIC’s findings while noting that participating lenders have already begun implementing improvements in response to the regulator’s review.

AFIA said the report provides an opportunity for lenders, regulators and consumer representatives to work together to strengthen customer outcomes and embed higher standards across the sector.

“This means building on the practical steps already taken by participating lenders to strengthen customer outcomes and embedding these improvements consistently across the sector to ensure they translate into better day-to-day outcomes for customers.”

Tate said AFIA is reviewing ASIC’s recommendations and will continue working with regulators and industry stakeholders to drive improvements.

“Our expectation is clear: customers must be treated fairly and respectfully, lenders must meet their legal obligations, and the industry must continue to lift standards in line with evolving customer needs and the changing conditions in the transport market and the broader economy,” she said.

AFIA believes its new Finance Industry Code of Practice will play a central role in responding to the issues highlighted by ASIC. The Code includes commitments to improve transparency and customer communications, strengthen support for customers experiencing financial hardship or vulnerability, enhance complaints handling and dispute resolution, and increase oversight of distribution channels.

Tate said members are already onboarding to the new Code, demonstrating a commitment to standards that go beyond existing legal requirements.

“We’ve also been working with stakeholders, such as motor dealers, to raise awareness of industry standards and ensure the AFIA Code is widely known across dealer networks,” she said.

“We’re also engaging with consumer representatives to better understand customer experiences, especially customers dealing with financial difficulties due to ongoing cost-of-living pressures and other changes in their financial and personal circumstances.”

ASIC’s report also highlighted the diversity of lending options and distribution channels available within Australia’s motor finance market.

AFIA pointed to its recent Motor Vehicle Finance Report, which showed that non-bank motor finance lenders supported more than 507,000 customers with $24.4 billion of vehicle finance during 2025, underlining the sector’s role in maintaining competition and access to finance.

“For many Australians, a car is a necessity, not a luxury, and motor finance non-bank lenders literally keep Australians moving,” Tate said.

“In a country defined by distance, where access to a vehicle is often essential for work, family and daily life, the sector plays a critical role in economic and social participation. That role comes with responsibility – customers must have confidence that finance is accessible, competitive and focused on delivering fair outcomes.”

She added that the AFIA Code strengthens expectations around clear communication, early support for customers and accessible routes for resolving disputes, while demonstrating the industry’s commitment to continuous improvement.

The AFIA Finance Industry Code of Practice, the first code developed specifically for Australia’s non-bank and specialist lending sector, will come into effect on 1 October 2026. It will be independently monitored by the Finance Industry Code Compliance Committee (FICCC), with the aim of reinforcing accountability and driving ongoing improvements across the motor finance industry.