Lender boosts standards following ASIC concerns
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."
Recommended for you
As the first quarter of 2024 comes to a close, Money Management looks back on the corporate regulator’s bans and AFSL cancellations in the financial advice sector.
Insignia Financial is holding ‘relatively steady’ onto its rank as Australia’s second-largest financial advice licensee after the Godfrey Pembroke exit but Count is hot on its heels.
Liberal senator Slade Brockman has said the government needs to have a “cold hard look” at the level of regulation in the financial advice space and the costs of running a business.
FAAA chief executive, Sarah Abood, has warned changes in the first tranche of the QAR legislation around advice fees documentation could create more work for advisers rather than less.