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 
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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.
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