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Bank imposes tighter credit policy

by Reporter5 minute read
Tight, caution wrap

A non-major lender has updated its lender policy, now requiring brokers to provide “all credit-critical information” prior to submitting a home loan application, among other changes.

Suncorp has informed its broker network that it has updated its lending policy, with changes effective immediately.

Among the changes is a requirement for brokers to include “all credit-critical information” before submitting a residential mortgage application, as part of its mandatory submission checklist in Apply Online.

Brokers will also be required to provide four months’ worth of bank statements from their client’s primary transaction account, credit cards and store cards to “better gather insights on customers living expenses”.

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Suncorp has also stated that it has updated its processes to allow brokers to access information on behalf of their clients through a “Broker Authority” that must be signed by the client.

Servicing guarantor

Additionally, Suncorp has announced that it has changed the way it assesses “non-applicants”, noting that it will now “treat the non-applicant as a guarantor’’, and thus require brokers to complete the guarantor sections on the Apply Online portal.

The bank has claimed that the changes would help align its credit policy with recommendations made by the Combined Industry Forum (CIF) as part of the industry’s move to self-regulate following the Sedgwick review, the Australian Securities and Investments Commission’s broker remuneration review, and the Productivity Commission’s inquiry.

Tighter serviceability requirements introduced by lenders have recently come under criticism from some sections of the broking industry, with Aussie Neutral Bay brokers Alex Kardasis and Domenic Andreone recently telling The Adviser’s Elite Broker podcast that such measures have complicated the broker-client relationship.

“With the banks, the policy was always trying to work out genuine savings. Can the client afford the loan? Have they shown a pattern of being able to repay the loan? That’s always been there,” Mr Kardasis said.

“Now it seems to be that there’s a lot more paperwork that goes into trying to actually prove that that is the case, where, like I said, we’ve always had that discussion. It was very easy to do. Work out the income, [work out if] they’re paying rent, [work out if] they’re also saving a little bit, and you can take that back to the lender.”

He continued: “That’s always been the case for us. We’ve always done it. I think every decent broker has always done that. It’s a little bit of a surprise for [us].”

Mr Kardasis said that the heightened serviceability requirements can be “patronising to clients”.

“You’ve got all different types of clients, right? It’s not just newbies; you’ve got seasoned investors, and you’ve got to ask, ‘Can you afford this loan? Show that you can afford this loan’.”

Mr Andreone added: “If you’re talking to a seasoned investor, or someone whose got lots of equity in their property, and they’ve had a mortgage for 20 years, to ask them for bank statements to prove their living expenses [can be] really intrusive [and] can come across as a little bit condescending and patronising.”

[Related: Brokers lament ‘patronising’ serviceability measures]

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