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Regtech responsible lending webinar

The data

ASIC has compiled a dataset of synthetic consumer loan files for demonstrators.

The files are synthetic and have been created for the purposes of the event to manage privacy concerns.

Demonstrators will be expected to use the ASIC dataset and public information such as ASIC regulatory guides as a minimum.

Demonstrators are encouraged to draw on public or third-party data in developing their solutions.

ASIC’s dataset has been compiled for illustrative purposes only and is not intended for assessing compliance.

ASIC acknowledges the current unusual COVID-19 pandemic environment. However, the dataset provided to demonstrators does not take into account the impact of COVID-19 and solutions that are tailored specifically to the pandemic are outside the scope of the event.

Synthetic consumer loan files

The document types include:

  • loan application form
  • application file notes
  • income and expense verification documents
  • requirements and objectives checklist
  • banking transaction data
  • credit bureau report
  • serviceability calculation
  • written final assessment
  • signed loan contract.

Responsible lending dataset files

ASIC has compiled a dataset of synthetic consumer loan files for demonstrators, comprising approximately 280 documents over 20 consumer loan files, in .docx, .pdf, .csv and .json formats.

 

Key components

Identify, extract and verify key information such as:

  • the applicant’s requirements and objectives
  • income and expenses
  • credit history (including enquiries and repayments)
  • information from lender file notes.

Identify risks, indicators of non-compliance and potential deficiencies by:

  • building rules and logic using key information extracted from consumer loan files
  • developing statistical and quantitative metrics using the content or metadata of consumer loan files and/or
  • using other methodologies such as supervised or unsupervised machine learning techniques.

Data guidelines

Legislation and regulatory guidance

For the purpose of this exercise, demonstrators should be informed by responsible lending requirements as detailed in relevant legislation and regulatory guidance including:

 

Potential metrics and features

Different combinations of these, or other metrics, could be provided, depending on the nature of the credit product and the individual consumer loan file.

  • Inquiries and verification
    • Can it be determined whether the credit provider made reasonable inquiries of, and took reasonable steps to verify, the applicant’s financial situation?
    • Were there matters (such as evidence of undisclosed expenses) that should have been inquired into further by the credit provider but were not?
    • Are there missing or deficient (eg. incomplete) documents in the consumer loan file which would ordinarily be present as a result of a credit provider’s inquiry and verification exercise?
    • Were the use of benchmark comparisons by the credit provider adequate and appropriate?
  • Purpose of loan
    • Did the credit provider make reasonable inquiries into the purpose of the loan?
    • Where an applicant has given a declaration that the loan was to be applied wholly or predominantly for a purpose that is not a consumer purpose, did the credit provider have reason to believe otherwise?
  • Assessment of unsuitability
    • Did the credit provider consider all relevant matters when assessing whether the proposed credit contract is unsuitable?

    • Did the credit provider rely on inaccurate or incorrect information when assessing whether the proposed credit contract is unsuitable?
      If so, what was the deficiency and how could the credit provider have improved its process?

    • Were there any other matters revealed by the credit provider’s inquiry and verification process that should have been taken into account in the assessment process but were not, e.g. existing liability commitments?

    • Can AI/machine learning capability be leveraged to analyse a consumer’s behaviour, e.g. expenditure patterns?

  • Requirements and objectives
    • Can the applicant’s requirements and objectives be identified?
    • Did the credit provider actively consider and respond appropriately to the applicant’s requirements and objectives?
  • Record-keeping obligations
    • Are there missing records or documents that should have been present on the consumer loan file?