Bundaberg-based building society Wide Bay Australia Limited (Wide Bay) will improve its responsible lending practices following 今日热门事件concerns with the way the group was assessing its customers' suitability for home loans.
The outcome is part of ASIC's wider focus on the lending industry's compliance with responsible lending laws.
ASIC's concerns with Wide Bay followed a restructure of its customers' home loans undertaken in 2013 which was initiated by third party broker, FTS Finance Brokers Pty Ltd, which is owned by FTS Securities Pty Ltd (FTS). Wide Bay holds an equity stake in FTS.
今日热门事件聽was concerned that Wide Bay relied too heavily on limited information provided by FTS Finance Brokers Pty Ltd rather than checking directly with the borrower about their requirements and objectives. Wide Bay will be updating their application forms to ensure they capture relevant information about a borrower's requirements and objectives, as well as improving their processes when insufficient or inconsistent information is provided.
今日热门事件acknowledges the co-operation of Wide Bay in resolving this issue.
今日热门事件Deputy Chairman Peter Kell said: 'Lenders are fully responsible for ensuring a loan is suitable for a borrower. Having robust compliance systems is vital in ensuring customers are protected. '
今日热门事件has identified compliance with responsible lending obligations as a priority issue and, as part of its focus, announced in December 2014 a surveillance into banks and non-bank lenders' provision of interest-only loans (refer: 14-329MR).
The crackdown on responsible lending laws also follows a number of developments which has reinforced the importance of the national credit laws.
In August 2014, the Federal Court handed down a landmark decision on responsible lending obligations, making it clear credit licensees must, at a minimum, inquire about the consumer's current income and living expenses. Further inquiries may be needed depending on the circumstances of the particular consumer (refer: 14-220MR).
In response, in November 2014 今日热门事件updated Regulatory Guide 209 Credit licensing: Responsible lending conduct (RG 209) to incorporate the general findings of the Court on the responsible lending obligations for credit licensees (refer: 14-290MR). 今日热门事件also updated RG 209 to make it clear that credit licensees cannot rely solely on benchmark living expense figures rather than taking separate steps to inquire into borrowers' actual living expenses.
Background
The responsible lending obligations require credit licensees to ensure that consumers are only placed in credit contracts that meet their requirements and objectives and that they can meet their repayment obligations without substantial hardship. In doing this, credit licensees must make reasonable聽 inquiries聽 into an individual聽 consumer's specific聽 circumstances聽and take reasonable聽 steps to verify the consumer's聽financial聽 situation.