Powered by MOMENTUM MEDIA
the adviser logo
Broker

ASIC issues new rules for brokers

by Nick Bendel4 minute read

ASIC has updated its responsible lending guidelines in response to a landmark court case that is set for resolution next month.

The regulator launched proceedings in 2013 against The Cash Store, a payday lender, and Assistive Finance Australia, its funder.

To continue reading the rest of this article, create a free account
Already have an account? Sign in

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.

Advertisement
Advertisement

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It also clarifies existing guidance and removes some material that was repetitive or outdated.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

ASIC issues new rules for brokers
default
TheAdviser logo
default

JOIN THE DISCUSSION

You need to be a member to post comments. Register for free today

MORE FROM THE ADVISER

wif awards 2021 crowd ta giiu3m

Submissions open for Women in Finance Awards 2022

Hosted by Momentum Media, the Women in Finance Awards is returning for its sixth consecutive year to recognise the...

READ MORE
Cameron Poolman ta

OnDeck confirms origination surge following buyout

In early February, OnDeck Australia’s (OnDeck) executives and investors collectively purchased 80 per cent of the...

READ MORE
Anja Pannek CEO PLAN

Anja Pannek named MFAA CEO

The board of the Mortgage & Finance Association of Australia (MFAA) has confirmed that Anja Pannek will be the...

READ MORE
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more