The federal government has revealed that it will overhaul lending practices by removing responsible lending obligations under the NCCP.
Commonwealth Treasurer Josh Frydenberg announced the government will streamline the lending process, removing the responsible lending obligations of the National Consumer Credit Protection Act 2009 (NCCP), except for low-value credit contracts (SACC) and consumer leases.
The proposed reforms also involve a shift from a “pay attention to lenders” model to a “borrower responsibility” model, allowing lenders to rely on information provided by borrowers.
These changes, in effect, remove the responsible lending mandate of the Australian Securities and Investments Commission (ASIC), as the regulator is no longer authorized to exercise its enforcement powers.
However, the government stressed that lenders would still be subject to regulation by the Australian Prudential Regulation Authority (APRA), which will continue to issue guidance on sound credit assessment and approval criteria.
Key elements of APRA’s guidance would also apply to non-banks, currently bound by the ACL and NCCP obligations imposed by ASIC.
Government reforms also aim to protect consumers from “predatory practices of debt management companies” by requiring them to hold an Australian Credit License (ACL) when paid to represent consumers in disputes with institutions. financial.
The changes also include an initiative to remove ambiguity over the application of consumer loan laws to small business loans.
“Credit is the lifeblood of the Australian economy, with billions of dollars in new credit extended to households and businesses in Australia every month,” said Treasurer Frydenberg.
“Now more than ever, it is critical that unnecessary barriers to accessing credit are removed so that consumers can keep spending and businesses can invest and create jobs.
“What began a decade ago as a principled framework for regulating the granting of consumer credit has now grown to be overly prescriptive, complex and unnecessarily onerous for consumers.”
Treasurer Frydenberg concluded: “These changes will make it easier for the majority of Australians and small businesses to access credit, cut red tape, improve competition and ensure that the toughest consumer protections target the most vulnerable Australians. “
The government will now begin a public consultation with stakeholders before finalizing any legislation needed to implement the reforms.
If adopted, the proposals would take effect from March 1, 2021.
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Charbel Kadib is the news editor on mortgage advisor and affairs.
Before joining the team in 2017, Charbel completed internships with the Fifty Acres public relations agency and the Department of Communications and the Arts.