ASIC asked by MFAA to clarify responsible lending criteria
The MFAA has recently been in the news for seeking information from ASIC regarding credit variations with a view to clarifying when responsible lending obligations are triggered. The MFAA was quoted as saying “Brokers should note that if a lender elects to document by a new contract, responsible lending is triggered for brokers and for lenders.” The MFAA believes that a variation to a credit contract is preferable to a new contract, as a new contract would require the broker to prepare a new Preliminary Credit Assessment and other disclosure documents.
The MFAA is said to be lobbying ASIC for 1. lenders to support variations, instead of encourage new contracts, where the consumer request is for a variation and 2. treasury to amend the law to state that if a variation is documented by a new contract, it is still a variation.
LIXI has previously received advice from Gadens Lawyers that the NCCP requirements are only triggered for variations when there is a credit increase, not when there is a new contract.
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