Responsible lending code creeps closer

The government is asking for feedback from lenders, borrowers and brokers to help write a Responsible Lending Code.

Thursday, July 10th 2014, 9:02AM 1 Comment

The requirement for a code is a requirement of the recently implemented Credit Contracts and Consumer Finance Amendment Act.

Under the act lenders must now operate with skill, care and diligence in all dealings with a borrower throughout the life of a credit contract.

The changes are expected to have a big impact on all lenders, most noticably the non-bank sector.

Consumer Affairs Minister Craig Foss says adopting a Responsible Lending Code will increase protection for borrowers without imposing unnecessary compliance costs on lenders who already have good systems in place.”

All lenders must comply with the lender responsibility principles outlined in the Act, including:

Helping a borrower reach an informed decision about whether to agree to a loan
Making reasonable enquiries to ensure the borrower can make repayments without suffering substantial hardship
Treating borrowers and their property reasonably, with respect and in an ethical manner
Ensuring the terms of the agreement and the exercise of powers by the lender are not oppressive
Meeting all legal obligations to the borrower

Submissions close on August 13, and the code is expected to be in place by March 2015.

Submissions can be made here.

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Comments from our readers

On 10 July 2014 at 10:11 am Andy said:

The sooner that hire purchase and ridiculous vehicle finance is stopped, the better. People need to be saving for luxuries, not spending their future. Finance companies are under no real obligation to ascertain the true affordability to a borrower, and as such do not spend any time getting the full story. The scenario where a client simply signs a declaration of statement of assets and liabilities as being correct needs to be changed, in favour of more rigorous and in-dept check, just as banks do. Until this happens, people with poor money-management skills will continue to sign up for unrealistic finance deals, and the repossessions and bankruptcies will continue.

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Responsible lending code creeps closer

The government is asking for feedback from lenders, borrowers and brokers to help write a Responsible Lending Code.

Thursday, July 10th 2014, 9:02AM 1 Comment

Comments from our readers

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