Credit licensees must comply with the responsible lending conduct obligations in Chapter 3 of the National Consumer Credit Protection Act 2009 (National Credit Act).
The key concept is that credit licensees must not enter into a credit contract with a consumer, suggest a credit contract to a consumer or assist a consumer to apply for a credit contract if the credit contract is unsuitable for the consumer.
As a credit licensee, you must decide how you will meet the responsible lending obligations.
On 25 September 2020, the Government announced proposed reforms to the responsible lending obligations contained in Ch 3 of the National Credit Act. The proposed reforms will amend the obligations that apply before entry into a credit product or the provision of credit assistance. ASIC’s guidance relating to the current responsible lending obligations will be reviewed and updated when the proposed reforms are finalised.
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).
ASIC's public hearings on responsible lending
In 2019, ASIC held public hearings to help us update our regulatory guidance on the responsible lending obligations: see RG 209, Consultation Paper 309 Update to RG 209: Credit licensing: Responsible lending conduct (CP 309) and read more about the hearings.
Information sheet 146 Responsible lending disclosure obligations: Overview for credit licensees and representatives (INFO 146) sets out your credit disclosure obligations under the National Credit Act and related regulations.
- Information Sheet 185 Using ASIC's reverse mortgage calculator (INFO 185)
- RG 209
- INFO 146
- COVID-19 information for lenders