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Responsible lending – an ongoing dilemma

Lenders and brokers face significant challenges to ensure that ASIC will be satisfied with their responsible lending processes.

How can licensees meet both customers’ immediate requirement and objective of a fast and easy approval, while at the same time meeting the legal obligation to enquire and verify information about ability to repay and the customer’s ‘underlying requirements and objectives’?

The Cash Store case demonstrated that courts will impose significant penalties on licensees who do not comply on a systemic basis.  The case demonstrated that generic statements about purpose will not be sufficient, and that more detailed enquiries and verification may be appropriate in respect of more vulnerable customers. More…