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Brokers have been warned that the recently updated responsible lending guidelines will mean more paperwork and bottlenecks.
Andrew Clouston, chief executive of software developer MOGO, said ASIC had taken a more defined position on responsible lending in response to a legal decision against The Cash Store, a payday lender.
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Mr Clouston told The Adviser that ASIC had removed much of the subjectivity from responsible lending.
Instead, the new rules mean that brokers are now obliged to review not just what someone earns, but also how much of that they are committed to spending.
Mr Clouston added that many brokers will struggle to handle the extra work and responsibility, because analysing bank statements is easier said than done.
"Customers simply do not have them readily on hand and the various mechanisms available to access [them] are either time-consuming or unacceptable to many lenders," Mr Clouston said.
"In addition, a new layer of complexity has been added by the adoption of 'Pay wave' or 'Tap and go' payments, where consumers regularly have 100-plus transactions per month through their account.
"Hence a bank account statement can be many pages and therefore require an enormous amount of effort to review fixed and variable expenses to arrive at the amount available for a loan commitment."
Mr Clouston said MOGO had pre-empted ASIC when designing its MOGOcheck verification app, because the UK – where MOGO also operates – already had defined regulatory guidelines.
"A single MOGOcheck verification across one or more bank accounts can produce a single income and expenses summary for immediate assessment in less than a minute," he said.
That means less work for brokers and a better experience for clients, Mr Clouston told The Adviser.
[Related: Association offers members real-time verification tool]
