ASIC updates credit licensing guidelines

ASIC has released updated guidance relating to responsible lending obligations under the NCCP Act.

Regulatory Guide 209 Credit licensing: Responsible lending conduct now includes guidance on the new responsible lending provisions under the Consumer Credit Legislation Amendment Act 2012 and some 'minor' clarification of existing guidance has been included.

ASIC Commissioner, Peter Kell, says the new guidance assists those engaging in credit activities to be aware of their obligations when considering the additional requirements under the Act.

“ASIC will adopt a balanced approach to administering the new requirements when industry makes efforts to comply, and the updated guidance will assist in that regard. ASIC will work with industry participants to address and rectify any problems.”

However, Kell says the regulator will take a ‘tougher’ approach where deliberate breaches or significant risk of consumer detriment occur.

“ASIC will review its approach and compliance expectations after the first few months, by which time industry should have fully adapted to the new obligations.”

The updated guidlines now include information:

• for small amount lenders when considering the presumption of substantial hardship and protected earning amount requirements
• in relation to obtaining and considering account statements when undertaking an assessment for a small amount loan
• on the responsible lending obligations for lessors
• on the responsible lending obligations for lenders offering reverse mortgages
• about a new obligation on credit providers and lessors to assess whether a credit contract or consumer lease is unsuitable for a consumer before making an unconditional representation about whether the consumer can enter a credit contract or lease, or increase the credit limit on an existing credit contract.

The majority of the changes will come into play on March 1 or July 1, 2013.