A Bundaberg-based building society has agreed to review its lending practices after the Australian Securities and Investments Commission raised concerns that it relied too heavily on "limited information" from a finance broker.
The move by Wide Bay Australia Limited came in the wake of an ASIC analysis of the lending industry's compliance with responsible lending laws.
ASIC said its concerns stemmed from a restructure of Wide Bay's customers' home loans undertaken in 2013, which had been initiated by a third party broker, FTS Finance Brokers Pty Ltd, owned by FTS Securities Pty Ltd, of which the building society holds an equity stake.
"ASIC was concerned that Wide Bay relied too heavily on limited information provided by FTS Finance Brokers Pty Ltd rather than checking directly with the borrower about their requirements and objectives," the regulator said.
"Wide Bay will be updating their application forms to ensure they capture relevant information about a borrower's requirements and objectives, as well as improving their processes when insufficient or inconsistent information is provided."
ASIC has previously identified compliance with responsible lending obligations as a priority issue, and announced in December that it would be carrying out surveillance of banks and non-bank lenders' provision of interest-only loans, with the regulator's deputy chairman, Peter Kell, warning lenders of their obligations.
"Lenders are fully responsible for ensuring a loan is suitable for a borrower," he said.
"Having robust compliance systems is vital in ensuring customers are protected."