Credit licensees must comply with the responsible lending conduct obligations in Ch 3 of the National Consumer Credit Protection Act 2009
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.
RG 209 sets out our expectations for compliance.
Meeting your responsible lending obligations will require taking three steps:
- make reasonable inquiries about the consumer’s financial situation, and their requirements and objectives;
- take reasonable steps to verify the consumer’s financial situation; and
- make 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 (based on the inquiries and information obtained in the first two steps).
In addition, if the consumer requests it, you must be able to provide them with a written copy of the preliminary assessment or final assessment (as relevant).
ASIC public hearings on responsible lending
ASIC is holding public hearings on responsible lending in Sydney on 12 August 2019 and Melbourne on 19 August 2019.