The core idea is that credit licensees must not enter into a credit contract with a consumer, recommend a credit contract to a consumer, or help a consumer in applying for a credit contract if the credit contract is unsuitable for the consumer. You must decide how you will satisfy your responsible lending requirements as a credit licensee.
The Government announced proposed modifications to the responsible lending responsibilities outlined in Chapter 3 of the National Credit Act on September 25, 2020. The proposed reforms would change the responsibilities that must be met before entering into a credit product or providing financial assistance. When the proposed amendments are completed, ASIC’s guidance on current responsible lending duties will be reviewed and revised.
Regulatory Guide 209 Credit licensing: Responsible lending conduct (RG 209) sets out ASIC’s views on the responsible lending obligations, and steps you can take to minimise the risk of non-compliance with these obligations.
The responsible lending obligations involve:
- making reasonable inquiries about a consumer’s financial situation, and their requirements and objectives
- taking reasonable steps to verify a consumer’s financial situation
- making a preliminary assessment (if you are providing credit assistance) or final assessment (if you are the credit provider) about whether the credit contract is ‘not unsuitable’ for the consumer
- if a consumer requests it, being able to provide the consumer with a written copy of the preliminary assessment or final assessment (as relevant).