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1 in 3 lenders unaware of borrowers’ outstanding loans
A third of lenders aren’t looking for documentation on debts a borrower may have with a third party, an ASIC hearing on responsible lending has uncovered.
1 in 3 lenders unaware of borrowers’ outstanding loans
A third of lenders aren’t looking for documentation on debts a borrower may have with a third party, an ASIC hearing on responsible lending has uncovered.
Speaking at the Australian Securities and Investment Commission hearing on lending practices in Melbourne, Mortgage Choice chief executive Susan Mitchell dropped the statistic before taking the opportunity to advocate for the setting of industry standards.
Considering that a third of lenders aren’t considering external debts, Ms Mitchell submitted that “there should be clearly defined minimum standards of fundamental inquiry and verification that apply universally across all credit and credit assistance providers”.
She cited that huge differences in living expense verification practices have been exhibited by lenders in the provision of home loans, with each institution having a different measure for household expenditure.
Ms Mitchell said there has been a widespread failure to adopt the industry standard, with some lenders looking at eight categories of expenses, while others might consider 15.
Mortgage Choice’s statements came just days after Westpac won a landmark case against ASIC regarding what constitutes considerations for responsible lending.
Mortgage Choice also explained that it advocates for making a consumer personally responsible as part of any changes or reforms to lending criteria.
This could be done by breaking expenses into two categories: the first being essential and comprise of unavoidable costs, while the other could look at non-essential or lifestyle costs.
Such an approach “places the onus upon the consumer to modify their lifestyle appropriately”, Ms Mitchell offered.
The responsible lending hearings, led by Karen Chester and Sean Hughes, will reportedly assist in ASIC’s development of new regulatory guidance on responsible lending obligations.
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