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Bundaberg-based building society Wide Bay Australia will improve its responsible lending practices following concerns voiced by ASIC about the way the group was assessing its customers’ suitability for home loans.
According to ASIC, its concerns with Wide Bay followed a restructure of the lender's customers’ home loans undertaken in 2013 and initiated by third-party broker FTS Finance Brokers Pty Ltd, which is owned by FTS Securities Pty Ltd (FTS). Wide Bay holds an equity stake in FTS.
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ASIC found Wide Bay relied too heavily on limited information provided by FTS Finance Brokers rather than checking directly with the borrower about their requirements and objectives.
Wide Bay will be updating its application forms to ensure it captures relevant information about a borrower’s requirements and objectives, as well as improving its processes when insufficient or inconsistent information is provided.
"Lenders are fully responsible for ensuring a loan is suitable for a borrower. Having robust compliance systems is vital in ensuring customers are protected," ASIC deputy chairman Peter Kell said.
ASIC has identified compliance with responsible lending obligations as a priority issue and, as part of its focus, announced in December 2014 a surveillance of banks and non-bank lenders’ provision of interest-only loans.
The crackdown on responsible lending laws also follows a number of developments which have reinforced the importance of the national credit laws.
