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RateSetter has called for brokers to diversify into personal lending as ASIC’s new credit card rules could negatively impact consumers.
Peer-to-peer lender RateSetter has claimed that the new credit assessment criteria from the Australian Securities and Investments Commission (ASIC) could expose consumers to a “harsh downside” of credit card debt.
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Under the new rules, consumers with significant credit debts are required to demonstrate their ability to repay their debt over a three-year principal and interest term.
RateSetter has urged brokers to get in touch with their clients to ensure they are aware of the effects of ASIC’s regulations on their personal finances.
“Brokers know their clients best. These credit card new rules could impact a client’s future prosperity and brokers should be connecting with their most valuable asset to educate them about these changes,” Mark Woolnough, RateSetter’s head of third party distribution, said.
According to RateSetter, the best option for customers to avert the impacts of ASIC’s new rules, when it comes to demonstrating loan serviceability in the future, could be to set an amortising loan over five years or less.
It noted that incorporating credit card debts into longer-term home loans is not always suitable for consumers.
As such, RateSetter believes the case for brokers to diversify into personal loans is intensifying.
“It simply makes good business sense to turn up to client conversations equipped with options like personal loans so that clients have a readily accessible solution,” Mr Woolnough said.
“Brokers shouldn’t fail to consider the potential diversification offers. Brokers only stand to act in their clients’ best interests. Diversification into personal loans is a logical gateway to business growth and increased revenue.”
