Responsible lending
Credit licensees must comply with the responsible lending conduct obligations in Chapter聽3 of the National Consumer Credit Protection Act聽2009聽(National Credit Act).
The key concept is that credit licensees must not enter into a credit contract with a consumer, suggest a credit contract to a consumer or assist a consumer to apply for a credit contract if the credit contract is unsuitable for the consumer.
As a credit licensee, you must decide how you will meet the responsible lending obligations.
Conduct
Regulatory Guide聽209 Credit licensing: Responsible lending conduct (搁骋听209) sets out ob体育鈥檚 views on the responsible lending obligations, and steps you can take to minimise the risk of non-compliance with these obligations.
The responsible lending obligations involve:
- making reasonable inquiries about聽a consumer鈥檚 financial situation, and their requirements and objectives
- taking reasonable steps to verify聽a consumer鈥檚 financial situation
- making a preliminary assessment (if you are providing credit assistance) or final assessment (if you are the credit provider) about whether the credit contract is 'not unsuitable' for the consumer
- if聽a consumer requests it, being able to provide the consumer聽with a written copy of the preliminary assessment or final assessment (as relevant).
ob体育's public hearings on responsible lending
In 2019, ob体育 held public hearings to help us update our regulatory guidance on the responsible lending obligations: see 搁骋听209, Consultation Paper聽309 Update to 搁骋听209: Credit licensing: Responsible lending conduct (颁笔听309) and read more about the hearings:
ob体育鈥檚 2019 public hearings on responsible lending and updates to RG 209
The hearings聽were held over two days in Sydney and Melbourne.
MELBOURNE聽鈥� 19 August 2019, Stamford Plaza Hotel Melbourne, Balmoral Room, 111 Little Collins Street, Melbourne
SYDNEY聽鈥� 12 August 2019, Wesley Conference Centre, Lyceum Room, 220 Pitt Street, Sydney
Purpose of the hearings
ob体育 has power under both the Australian Securities and Investments Commission Act聽2001 (ob体育 Act) and National Consumer Credit Protection Act聽2009 (the National Credit聽Act) to convene public hearings for the purpose of performing or exercising its functions and powers. ob体育鈥檚 functions include providing guidance on the requirements of the laws it administers 鈥� including the responsible lending obligations in Chapter聽3 of the National Credit Act.
ob体育 decided to use its hearing power to help it develop its regulatory guidance on responsible lending obligations. The application of these obligations is critical to the making of appropriate credit decisions, and our guidance on these obligations is a matter of significant public interest.
We considered public hearings would provide a useful and transparent way to robustly test with selected participants some of the main issues and views raised in the written submissions in response to Consultation Paper聽309 Update to RG 209: Credit licensing: Responsible lending conduct (颁笔听309).
Who participated in the public hearings?
ob体育 received 72 submissions in response to 颁笔听309. We selected from the submissions some parties that we considered would be able to provide additional views and perspectives on key issues that were raised across a range of industry and consumer stakeholders.
Participant list
Sydney
- Commonwealth Bank of Australia
- Bank of Queensland
- Athena Home Loans
- Financial Rights Legal Centre
- illion Open Data Solutions
- Tic:Toc Online
- Australian Retail Credit Association
- Westpac Banking Corporation
Melbourne
- Consumer Action Legal Centre
- Consumer Credit Legal Services (WA)
- The Melbourne Institute
- LIXI Limited
- Mortgage Choice
- Connective
- Australian Finance Group
- Australian Financial Complaints Authority
- Auscred Ltd (Lendi)
- National Australia Bank
- Australia and New Zealand Banking Group
The conduct of the hearings
Commissioners
The hearings were conducted by Deputy Chair Karen Chester and Commissioner Sean Hughes.
Public attendance
The public hearings were open to the public and all interested parties and observers to attend. Reporting of the evidence provided was encouraged.
Only invited participants were permitted to speak on record at the hearings.
Participation
Participants were not compelled to attend the hearing. The hearings were conducted with as little formality as possible. Participants were invited to introduce themselves and make an opening statement if they wished.
ob体育 required participants to be truthful in their remarks: a person who appears at the hearing must not give information that is false or misleading in a material particular (section聽291 of the National Credit聽Act).
Recording of proceedings
Proceedings were recorded and live-streamed on ob体育鈥檚 website. Transcripts of proceedings are available: see the MELBOURNE 鈥� 19 August 2019 transcripts and SYDNEY 鈥� 12 August 2019 transcripts.
Disclosure
Information sheet聽146 Responsible lending disclosure obligations: Overview for credit licensees and representatives (INFO 146) sets out your credit disclosure obligations under the National Credit Act and related regulations.
Related links
- Information Sheet聽185 Using ob体育's reverse mortgage calculator (滨狈贵翱听185)
- 搁骋听209
- INFO 146
- Responsible lending
- COVID-19 information for lenders