ASIC guidance on new responsible lending laws

ASIC has released updated guidance to help industry comply with responsible lending obligations under the National Consumer Credit Protection Act 2009.

Regulatory Guide 209 Credit licensing: Responsible lending conduct (RG 209) now includes guidance on the new responsible lending provisions under the Consumer Credit Legislation Amendment (Enhancements) Act 2012 (Enhancements Act). Some minor clarification of existing guidance has been included.

ASIC Commissioner Peter Kell said the guidance will assist those engaging in credit activities to be aware of their obligations when considering the additional requirements under the Enhancements Act.

‘ASIC will adopt a balanced approach to administering the new requirements when industry makes efforts to comply, and the updated guidance will assist in that regard. ASIC will work with industry participants to address and rectify any problems.

‘However, ASIC will take a tougher approach where deliberate breaches, serious misconduct or significant risk of consumer detriment occur.

‘ASIC will review its approach and compliance expectations after the first few months, by which time industry should have fully adapted to the new obligations’, Mr Kell said.

RG 209 now includes guidance:

  • for small amount lenders when considering the presumption of substantial hardship and protected earning amount requirements
  • in relation to obtaining and considering account statements when undertaking an assessment for a small amount loan
  • on the responsible lending obligations for lessors
  • on the responsible lending obligations for lenders offering reverse mortgages
  • about a new obligation on credit providers and lessors to assess whether a credit contract or consumer lease is unsuitable for a consumer before making an unconditional representation about whether the consumer can enter a credit contract or lease, or increase the credit limit on an existing credit contract.

The majority of provisions in the Enhancements Act commence on either 1 March or 1 July 2013.

ASIC has also updated Regulatory Guide 204 Applying for and varying a credit licence (RG 204) and Regulatory Guide 206 Credit licensing: Competence and training (RG 206) to reflect these new laws.

See ASIC’s credit page for more information about the consumer credit regime, including relevant policy announcements and regulatory guidance.

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