Responsible lending rules updated by ASIC

The Australian Securities & Investments Commission has updated its guidance surrounding responsible lending rules for the first time in five years.

The National Credit Laws provide consumers with important protections when seeking credit directly from a lender or through a broker.

ASIC’s revised guidance is intended to assist lenders and brokers to comply with their responsible lending obligations and ensure that they do not recommend or provide credit that is unsuitable.

ASIC Commissioner Sean Hughes said ASIC conducted extensive consultation on this important issue.

The aim is to stop banks and finance companies saddling consumers with unsustainable debt by requiring they obtain sufficient, reliable and current information about a customer’s financial position.

It follows ASIC's decision to appeal an adverse Federal Court ruling on alleged responsible lending breaches by Westpac.

The regulator advised that the decision in the appeal to the Full Federal Court would be reflected in any revised guidance.

Australian Banking Association chief executive Anna Bligh said the updated rules would provide clarity to banks on ASIC’s views on what responsible lending obligations require before offering credit to customers.

“This is an important document for the industry to guide each bank’s approach to responsible lending which we will now study closely to assess any impacts it may have on borrowing for customers,” Ms Bligh said.

“The industry is pleased to see ASIC has maintained a principles based approach to lending, which as an industry we have called for, and to ensure banks are able to fulfil their obligations without the process becoming too restrictive for customers,” she said.