ASIC’s existing guidance allows a tailored approach to applying responsible lending obligations, but licensees may be applying them where the law does not require it.
ASIC (the Australian Securities and Investments Commission) has issued a consultation paper to update its guidance on responsible lending, in a bid to provide greater clarity on the particular inquiries and verification steps that would be considered reasonable in lending practices.
Responsible lending laws were first introduced in Australia in 2010. ASIC said it is looking to review and update its guidance (RG 209) in light of its recent regulatory and enforcement work, thematic reviews, changes in technology, changes in law, and the recent Final Report of the Royal Commission into financial services misconduct.
The review will consider whether the existing guidance remains effective and seeks to identify changes and additions that can help Australian credit licencees to understand ASIC’s expectations for complying with responsible lending obligations.
“ASIC wants to ensure its guidance provides industry with certainty, including as a result of emerging technology and initiatives such as open banking and comprehensive credit reporting,” said ASIC commissioner Sean Hughes.
The existing guidance allows licensees to tailor their responsible lending processes in a way that is appropriate for their business and consumers. ASIC has received anecdotal feedback that licensees may be applying the responsible lending obligations where the law does not require them, such as in small business lending.
ASIC is considering whether it should identify in the guidance particular inquiries and verification steps that would be considered reasonable, to provide greater certainty to licensees about complying with their obligations.
The consultation paper, available here, is open for comment until 20 May 2019.