Non-Bank Lenders Intensify Legal Actions Amid Rising Insolvencies

As of late 2025, over 32,000 businesses faced insolvency-related activities, up from around 30,000 earlier in the year. The Australian Taxation Office (ATO) remains the primary source of court actions, maintaining high levels of recovery efforts against companies and individuals.

Non-bank lenders are stepping up their enforcement actions to record levels, while major banks are retreating from such activities. This shift suggests that major banks are focusing on low-risk lending, thereby forcing small and medium-sized enterprises (SMEs) towards non-bank lenders.

For borrowers, particularly SMEs, this development underscores the importance of maintaining financial health and meeting repayment obligations. The increased likelihood of legal action from non-bank lenders necessitates proactive financial management and open communication with lenders to address potential issues before they escalate.

Financial advisors and brokers should be aware of this trend to better assist clients in navigating the evolving lending landscape. Understanding the differing approaches of non-bank lenders and major banks can inform strategies for debt management and financing options.

In summary, the rise in court enforcement actions by non-bank lenders reflects a changing dynamic in Australia's financial sector. Borrowers and industry professionals must adapt to these changes, emphasising proactive financial management and informed decision-making to mitigate risks associated with debt recovery actions.