MFAA wants clarity on variations to credit contracts
The Mortgage and Finance Association of Australia (MFAA) is seeking clarity from the Australian Securities and Investments Commission (ASIC) regarding the circumstances by which responsible lending obligations apply to variations to credit contracts.
Under the 'National Consumer Credit Protection Act 2009' (NCCP Act), increases to a credit contract automatically trigger responsible lending requirements, but if a borrower wishes to vary the terms of a loan, the requirement for disclosure documents will depend on individual circumstances.
The MFAA stated that it is currently seeking assistance from lenders regarding "where a variation to a credit contract is required by a borrower, this is preferable to a new contract which would require the broker to prepare a new preliminary credit assessment along with other disclosure documents".
If a new contract is drafted, then the lender's obligation to complete new disclosure documents will also apply.
The MFAA is lobbying lenders not to use new contracts where a consumer request is only for a variation, and for Treasury to amend the NCCP Act to state that if a variation is documented by a new contract, it is still a variation.
"However, where a variation to an existing credit contract is suggested as an alternative to a new credit contract (either with the same or different credit provider), it would be expected that responsible lending obligations for credit assistance would be triggered," the MFAA added.
Recommended for you
Managed accounts saw net inflows of $16.7 billion in the six months to 30 June, as IMAP chair Toby Potter describes the offering as having reached their “maturity phase”.
Coastal Advice Group has completed the acquisition of three advice businesses across Australia, as it sets its sights on major national expansion over the next financial year.
Financial advisers are demonstrating growing interest in crypto ETFs, with momentum pushing assets in these products past $800 million.
Colonial First State has exceeded $20 billion invested in its CFS managed accounts, announcing multiple expansions to its platform offering.
