Regulatory update
ASIC takes action against Swoosh for alleged responsible lending failures and DDO breaches
ASIC has started Federal Court proceedings against Swoosh Finance, alleging responsible lending failures and DDO breaches. Here is what the case is about and what it means for lenders.
The Australian Securities and Investments Commission (ASIC) has started civil penalty proceedings in the Federal Court against Ausfinancial Pty Ltd, which trades as Swoosh Finance (Swoosh).
ASIC alleges that Swoosh broke its responsible lending obligations and its design and distribution obligations (DDO). These are allegations only. It is up to the court to decide whether they are proven.
Update (October 2026): The case is still before the Federal Court and no decision has been made. According to ASIC’s media release, the hearing on liability is now listed to start on 30 March 2027.
Key takeaways
- ASIC alleges Swoosh gave loans to 11 consumers between October 2019 and October 2024 without properly checking their finances.
- The loans were generally $2,000 to $3,000, secured against a vehicle, with upfront fees of more than $400 and interest of 47% a year.
- ASIC also alleges Swoosh did not review its target market determinations, even though complaints were rising.
- The case relies on the National Consumer Credit Protection Act 2009 and the Corporations Act 2001.
- For lenders, the lesson is simple: check each borrower’s finances properly, and treat complaints as a reason to review your target market.
On this page
What is the ASIC Swoosh Finance case about?
In the ASIC Swoosh Finance case, ASIC says Swoosh did not properly assess whether 11 loans were unsuitable for the people who took them out.
ASIC says many of these borrowers were in difficult financial situations. Some had several existing loans, frequent wage advances or buy now, pay later debts. Others showed clear signs of financial stress, such as dishonoured direct debits, negative bank balances or credit defaults.
In some cases, the loans were allegedly used to pay off other debts or to cover everyday costs, like groceries and car repairs.
What were the loans?
The loans were generally between $2,000 and $3,000. They were secured against the borrower’s vehicle, usually a car. This means the lender could take the vehicle if the loan was not repaid.
ASIC says the loans had upfront fees of more than $400, an interest rate of 47% a year, and further fees if the borrower fell behind.
Which laws does ASIC say were broken?
| Obligation | Law | What ASIC alleges |
|---|---|---|
| Responsible lending | National Consumer Credit Protection Act 2009, sections 128, 130(1), 131(1) and 133(1) | Swoosh did not properly inquire about, verify and assess the finances of 11 borrowers. |
| Design and distribution (DDO) | Corporations Act 2001, section 994C(4) | Swoosh did not review its target market determinations despite rising complaints. |
What are responsible lending obligations?
Responsible lending obligations are rules in Chapter 3 of the National Consumer Credit Protection Act 2009 (Cth) (the Credit Act). They aim to stop lenders giving people credit they cannot afford.
In simple terms, before a lender enters a credit contract with you, it must:
- make reasonable inquiries about your financial situation, and your needs and objectives
- take reasonable steps to verify your financial situation
- assess whether the contract will be unsuitable for you
- not enter the contract if it is unsuitable.
A loan is unsuitable if, for example, you are likely to be unable to repay it, or could only repay it with substantial hardship. A loan can also be unsuitable if it does not meet your needs and objectives.
What are the design and distribution obligations (DDO)?
The DDO regime is in Part 7.8A of the Corporations Act 2001 (Cth). It started on 5 October 2021. It applies to many financial products, including most consumer credit products.
Under the DDO, a product issuer must prepare a target market determination (TMD). A TMD is a document that describes who the product is suitable for, and how it should be distributed.
A TMD is not a set and forget document. The issuer must review it when something happens that suggests it may no longer be appropriate. These events are called review triggers. A rise in complaints is a common example.
ASIC alleges Swoosh kept lending despite increasing complaints, both from customers directly and through the Australian Financial Complaints Authority (AFCA), without reviewing its TMDs.
What did ASIC say about the case?
ASIC Deputy Chair Sarah Court said ASIC alleges Swoosh “failed to properly inquire about, and verify, the consumers’ financial situations” before offering them credit.
She also made the point that publishing a TMD is not a one-off task. Issuers must update their TMDs when the target market is no longer appropriate.
What does this mean for lenders?
This case shows ASIC is focused on both responsible lending and DDO compliance. This is especially so for small, high-cost loans to people in financial difficulty.
If you are a lender or credit provider, consider these steps:
- Check that your inquiry and verification steps are actually followed for every loan, not just written in a policy.
- Look for red flags in bank statements, such as dishonours, negative balances, frequent wage advances and buy now, pay later debts.
- Record your unsuitability assessment and the reasons for it.
- Set clear review triggers in each TMD, including the number and type of complaints and AFCA complaints.
- When a review trigger happens, review the TMD promptly and keep a record of the review.
- Have your TMDs and DDO governance framework reviewed independently from time to time.
Frequently asked questions
Has the court found Swoosh liable?
No. These are allegations only. As at October 2026, the court has not decided whether Swoosh broke the law.
What can the court order if the allegations are proven?
The court can order civil penalties and make other orders. The amount of any penalty depends on the facts of the case.
Does the DDO regime apply to consumer loans?
Yes. The DDO regime applies to most consumer credit products, as well as many other financial products such as insurance and investments.
What is a review trigger?
A review trigger is an event that suggests a TMD may no longer be appropriate. Common examples are a rise in complaints, high default rates or a significant change to the product.
Need help with DDO or responsible lending?
Talk to our banking and financial services team
Banking & Financial Services Law
If you are a lender or product issuer, we can review your TMDs and DDO governance framework. Learn more about our design and distribution obligations services.
We also help credit providers with their responsible lending policies and processes. See our consumer credit legal services.
This article is general information only and is not legal advice. It reflects the law and information available at the date of publication. Please contact us for advice about your circumstances.