The online broking platform has expressed support for a revision to ASIC’s responsible lending guidance that would enable brokers to provide product suggestions to clients prior to verification.
Appearing before the Australian Securities and Investments Commission (ASIC) in its second round of public hearings regarding a proposed update to its responsible lending guidance (RG 209), Lendi co-founder Martin Lam called for further clarification relating to what level of assistance a broker can provide to a consumer before verifying their financial position.
Mr Lam acknowledged the need for verification prior to the recommendation and facilitation of a particular credit contract but highlighted the need for better guidance relating to what services a broker can offer to clients prior to verification.
“We see there being an asymmetry in those requirements between credit assistance providers and credit providers,” he said.
“Credit providers are able to provide additional approvals subject to verification, whereas credit assistance providers can’t.”
Mr Lam noted that in the current guidance, there is a reference to what requirements a credit assistance provider has to meet before providing a “suggestion” to a customer, which includes inquiring about their needs and objectives and their financial circumstances before verifying their financial position in order to make an assessment.
“What we’re looking for is further guidance as to what that ‘suggestion’ means,” he said.
“The plain English understanding of a ‘suggestion’ is a very low bar. It’s the comparison of one with another, saying that it’s better.”
The Lendi co-founder noted the benefits of enabling a broker to provide clients with product suggestions prior to verification, adding that the industry “should have the opportunity” to do so under RG 209.
“In a digital age when consumers come online to look for information from us, we’d like to be able to [tell] them that ‘based on the information you’ve provided us, [this] is what might be suitable for you’ or ‘this product is better than this’.
“[But] for us to be able to do that, we’d have to complete all steps of inquiry and verification, whereas a credit provider does not necessarily have the same bars.”
He continued: “We’re looking for further clarification between ‘suggestion’ and ‘recommendation’ and assisting a consumer into a credit product.”
ASIC’s second round of public hearings have now concluded, with the corporate regulator expected to publish its new guidance before the end of the calendar year.