Regulation Impact Statement – The Treasury
On 9 December 2020, the Government introduced legislation on changes to the consumer credit framework requiring lenders to establish appropriate systems, policies and processes for assessing borrowers’ capacity to repay without substantial hardship. Responsible lending obligations (RLOs) will be retained for small amount credit contracts (SACCs) and consumer leases.
The Office of Best Practice Regulation (OBPR) assessed the Regulation Impact Statement (RIS) prepared by the Treasury as adequate with the Government’s requirements but not consistent with good practice.
For the RIS to be considered ‘good practice’, the analysis could have been further improved by:
- additional evidence as to whether the existing RLOs are currently protecting borrowers from unsuitable loans, over and above existing protections, and balanced against the broader objectives of reducing unnecessary and duplicative requirements;
- extending the analysis in the RIS of the circumstances where some consumers may be exposed to potential harm should lenders not act in their best interests, given the overlap of the RLOs with the protections provided by lending obligations under APRA’s prudential frameworks; and
- a consultation period of longer than 16 days, which is shorter than the recommended period of a minimum 30 days, for changes as significant as the removal of RLOs.
Please note: any accessibility enquiries should be directed to the Treasury.