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Aussie urges ASIC to enshrine consumer obligations

by Charbel Kadib5 minute read
Aussie

Brokers who exercise due diligence should “in no way be liable” if they fail to detect misleading information provided by a consumer in a mortgage application, Aussie Home Loans has submitted to ASIC.  

In its response to the Australian Securities and Investments Commission’s (ASIC) request for consultation regarding its push to update its responsible lending guidelines (RG 20), Aussie Home Loans has expressed support for the codification of consumer obligations in the corporate regulator’s guidance.

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The brokerage said that it does not believe that credit licensees should be liable if they do not detect misleading information provided by consumers in response to a broker enquiry.  

“Aussie’s view is that guidance could be improved in relation to reflecting the consumer’s role in responsible lending and, in particular, their responsibility in relation to their responses to inquiries, and the information and support they provide for verification purposes,” Aussie submitted.

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“Aussie believes that a licensee who has exercised due care and skill and has taken reasonable steps to verify information provided by a consumer, should in no way be liable for not detecting non-disclosure or false, fraudulent or misleading information or documentation provided by the consumer.”

The brokerage also submitted that there is certain information a consumer may provide by way of inquiry that “cannot be verified”.

“[If] a consumer states that they plan to reduce their levels of discretionary spend, Aussie believes that a licensee should be able to rely on such statements provided they have assessed it to be reasonable,” the brokerage noted.

“Similarly, as examples, if a consumer states that they do not anticipate any changes to their financial situation, or that they have a certain number of dependents, or they have a pre-determined exit strategy for a loan (especially a home loan), a licensee should be able to rely on such statements.”

Therefore, Aussie has recommended that borrowers be required to formally confirm the accuracy of the information they provide to licensees by signing documentation containing the relevant information before it is submitted on their behalf.  

“Aussie believes that guidance should recommend that consumers be asked to confirm that the information they have provided is true and correct and can be relied upon for the purpose it has been provided,” the brokerage concluded.

ASIC will host public hearings in August to further consult on its proposed changes, with stakeholders invited to participate in the hearings to be drawn from the groups or individuals who provided a written submission to ASIC in the first round of consultation.

The hearings will be held in Sydney and Melbourne.

[Related: ASIC urged to codify broke broker obligations]

Aussie urges ASIC to enshrine consumer obligations
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Charbel Kadib

Charbel Kadib

AUTHOR

Charbel Kadib is the news editor on The Adviser and Mortgage Business.

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