Today, 25th September, Federal Treasurer Joshua Frydenberg has announced the government's plans to reform credit laws to improve the ability for lenders to lend. Whilst no legislation has been presented yet, the announced plans include:
- Removing the responsible lending provisions from the credit act
- Remove ASIC's remit for regulating lenders on credit quality, leaving this solely to APRA's prudential standards
- Regulation of debt assistance services
- Increasing the scope of small business lending to change from more than 50% business use to ANY business use
Early comments that we are seeing from brokers are celebratory, noting the end of the escalating compliance requirements for mortgage brokers. HOWEVER, here at QED we want to issue a few words of caution. The government's media release also made very clear that BID is here to stay for brokers.
Readers of QED's recent announcements would be well aware that our stance has long been that BID and Responsible Lending have very little difference between them. If you help someone into a loan that they can't afford or does not meet their requirements and objectives, you would also be failing to meet their best interests. Not to mention, responsible lending is just one of a Licensee's many obligations.
One thing that we are particularly worried about is that, with ASIC no longer in charge of regulating lenders, this will make brokers a prime target for increased scrutiny from the regulator, particularly if the industry begins to think that this is the time to drop its compliance.
We hope that the changes will allow brokers to reduce unnecessary red tape from their processes, however encourage brokers to be cautiously optimistic until the final laws - QED will be here to advise you every step of the way.
Rather than believing what the press has chosen to report, have a look at Treasury's actual fact sheet::
To view the press media releases, see the links below: