Changes for lender after ASIC concerns

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Concerns from the Australian Securities & Investment Commission (ASIC) have resulted in Bank of Queensland (BOQ) changing its home loan assessment applications. 

The changes come after ASIC expressed concerns about the banks practice of using a benchmark figure, the Henderson Poverty Index (HPI), to estimate the living expenses of consumers applying for home loans, rather than asking borrowers about their actual expenses.

ASIC believed the bank’s use of HPI (which is used as a measure for estimating the minimum amount of money families of different sizes need to cover basic essential needs) in that manner was not consistent with responsible lending obligations imposed by the National Credit Act.

In November 2014, ASIC updated Regulatory Guide 209 Credit licensing: Responsible lending conduct to clarify that credit licensees cannot rely solely on benchmark living expense figures, and must also make inquiries about the borrowers’ actual living expenses.

ASIC deputy chairman Peter Kell said the regulator was focused on ensuring lenders were acting responsibly. 

“This outcome is part of ASIC’s ongoing focus on the lending industry’s compliance with responsible lending laws," Kell said.

“Lenders must carry out inquiries to determine whether a credit contract will be unsuitable for a consumer, using benchmark figures such as the Henderson Poverty Index alone to estimate a consumer's financial position is not sufficient to meet this requirement.”


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