The major bank has revised its home lending policy to align with recent guidance regarding the implementation of the new banking code.
ANZ has made changes to co-borrower and financial abuse provisions introduced in response to the new Banking Code of Practice.
The bank noted that the revisions have been made to address recent concerns over the original wording of the declaration forms, which broking industry stakeholders feared would impose a legal obligations on brokers who were not qualified to assess a borrower’s vulnerability.
ANZ has now stated that if each co-borrower is receiving a “substantial benefit” from a loan, the details of the substantial benefit are required to be documented by the broker, which may include instances in which:
- the co-borrower acquires a reasonably proportionate legal or equitable interest in assets purchased with the loan funds (e.g. a purchase/refinance of property where the co-borrower’s name is on the title with a minimum 25 per cent ownership); or
- a reasonable portion of the loan funds are used to repay the co-borrower’s debts or other obligations owed by the co-borrower (e.g. repayment of debts can contribute some or all of the substantial benefit).
The bank added that if such examples apply, answers to additional questions are no longer required.
However, ANZ noted that if substantial benefit cannot be demonstrated, some additional questions are required to “protect a co-borrower”, adding that:
- all co-borrowers need to understand the risks associated with entering into the loan, and understand the difference between being a co-borrower and a guarantor;
- co-borrowers have provided the reasons why they want to be a co-borrower, and these are consistent with lending policy.
Moreover, ANZ has rephrased its financial abuse declaration form, with brokers now required to ensure that during their dealings in connection with the loan application:
- No applicant has stated that he or she is subject to financial abuse;
- They did not notice anything which caused them to consider that there may be financial abuse.
“These changes aim to simplify the ANZ process and address recent commentary around the Banking Code of Practice provisions relating to co-borrowers and financial abuse,” ANZ stated.
“This will also ensure customers continue to be afforded the appropriate level of support and ANZ continues to meet its requirements under the code.”
This comes after the Australian Banking Association, the Mortgage & Finance Association of Australia, and the Finance Brokers Association of Australia agreed on a “common approach” to identifying financial abuse in a co-borrower arrangement.