ASIC issues new rules for brokers

A penalty hearing is set for 15 December after the Federal Court found the firms guilty of breaching their responsible lending obligations. They could each be penalised up to $7.7 million.

The Federal Court finding is the first judicial decision on the application of the responsible lending provisions.

ASIC has responded by updating Regulatory Guide 209, four years after it was first issued.

"The Federal Court's decision makes it clear credit licensees must, at a minimum, inquire about the consumer's current income and living expenses to comply with the responsible lending obligations," ASIC said.

"We have 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."

The new guide also reflects changes to statutory restrictions on charges for small amount credit contracts, according to ASIC.

It also clarifies existing guidance and removes some material that was repetitive or outdated.

ASIC deputy chairman Peter Kell said the responsible lending obligations provide an important protection for consumers.

"It is vital that credit licensees regularly review their processes to ensure compliance with their obligations," he said.

[Related: Former ASIC investigator warns brokers over compliance]