Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Responsible lending laws to be scrapped

parliament

parliament
Charbel Kadib 3 minute read

The federal government has revealed that it will move to overhaul credit practices by scrapping responsible lending obligations under the NCCP. 

Commonwealth Treasurer Josh Frydenberg has announced the government will move to simplify the credit process, by scrapping responsible lending obligations from the National Consumer Credit Protection Act 2009 (NCCP), with the exception of small amount credit contracts (SACCs) and consumer leases.

The proposed reforms also involve a shift from a “lender beware” model to a “borrower responsibility” model, allowing lenders to rely on the information provided by borrowers.  

These changes, in effect, remove the Australian Securities and Investments Commission’s (ASIC) responsible lending remit, with the regulator no longer authorised to exercise its enforcement powers.

However, the government has stressed that lenders would still be subject to regulation from the Australian Prudential Regulation Authority (APRA), which will continue to issue guidance regarding sound credit assessment and approval criteria.

Key elements of APRA’s guidance would also be applied to non-banks, currently bound by ACL and NCCP obligations enforced by ASIC.

The government’s reforms also aim to protect consumers from the “predatory practices of debt management firms” by requiring them to hold an Australian Credit Licence (ACL) when they are paid to represent consumers in disputes with financial institutions.

The changes also include a move to remove ambiguity regarding the application of consumer lending laws to small-business lending.

Advertisement
Advertisement

“Credit is the lifeblood of the Australian economy, with billions of dollars in new credit extended to households and businesses in Australia each month,” Treasurer Frydenberg said.

“Now more than ever, it is critical that unnecessary barriers to accessing credit are removed so that consumers can continue to spend and businesses can invest and create jobs.

“What started a decade ago as a principles-based framework to regulate the provision of consumer credit has now evolved into a regime that is overly prescriptive, complex and unnecessarily onerous on consumers.”

Treasurer Frydenberg concluded: “These changes will make it easier for the majority of Australians and small businesses to access credit, reduce red tape, improve competition and ensure that the strongest consumer protections are targeted at the most vulnerable Australians.”

The government will now commence public consultation with stakeholders before finalising any legislation required to implement the reforms.

PROMOTED CONTENT


If passed, the proposals would take effect from 1 March 2021.

[Related: Conflicted remuneration defined in new regulations]

Responsible lending laws to be scrapped
parliament
TheAdviser logo
parliament
Charbel Kadib

Charbel Kadib

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

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

Email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

more from the adviser
handshake 2 Uno pilots new broker referral model

Online mortgage platform uno has launched its first partnership w...

mortgage application Moneytech joins SME Guarantee Scheme panel

The business finance lender has been appointed by Treasury to par...

suburbs NAB joins affordable housing cooperative

The major bank has announced its membership in the Constellation ...

FROM THE WEB