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ISCOVER
Jessica Darnbrough
Brokers have slammed ASIC’s clarification of the NCCP Act, labelling the regulator’s efforts as “appalling”.
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Earlier this week, ASIC attempted to address growing confusion surrounding certain aspects of the National Consumer Credit Protection Act – particularly areas that concern older borrowers.
In the updated Regulatory Guide 209, ASIC provides further guidance and clarity for lenders on assessing borrowers' capacity to repay under the responsible lending requirements.
However, brokers said the clarification failed to clear up any of the confusion surrounding the new legislation.
Judy West from Judy West Finance said the regulation was as “clear as mud”.
Ms West called on the regulator to provide a few examples of what would be considered “not unsuitable for older borrowers”.
“Regulators and lenders should not make a blanket judgment of all older borrowers which they appear to do when making statements such as “must be able to demonstrate an exit strategy after retirement that does not include the sale of the family home”,” Ms West told The Adviser.
“Do older Australians need to be dealt with as though they have no brains or decision-making capacity?”
And Ms West wasn’t alone in her concerns.
Paul Woodley from Paul Woodley Loans said the clarification that ASIC provided shows lenders are in fact allowed to discriminate against people on the basis of their age.
“Buying a residence with good capital growth potential at age 50-60 (whilst still employed and earning good money), holding it for 5-20 years, then selling and downsizing at retirement is a perfectly legitimate non CGT liable investment option. It is a good supplementary retirement strategy many thousands of Australians have successfully employed. However this legislation significantly inhibits this investment strategy and entrenches age discrimination in lending,” he said.
Mr Woodley said both the government and ASIC appear clueless as to the real world impacts of the new legislation.
“This legislation provides no real world benefit to consumers. In fact there is a cost to consumers with at least 15 minutes added to the loan application process, a process that was already very time consuming. That is before I mention the added compliance cost to brokers and lenders – which ultimately the consumer also pays. At the same time this legislation has made lending more difficult for many self employed people, and anyone aged 50 and above,” he said.
