“It’s time to reduce the red tape on credit applications in Australia.”
Treasurer Josh Frydenberg will hopefully shake up lending laws. He aims to simplify the borrowing system by moving away from a “one-size-fits-all” approach while at the same time strengthening consumer protections for those that need it.
Today, under the current laws, lenders are required to conduct rigorous risk assessments when a borrower seeks a loan. These laws were, in short, a response to the global financial crisis, and effectively, those laws make the bank responsible for the decision to lend to you. These proposed new laws will put the ball in the borrower’s court.
We have broken down the outcomes, what it means for you and how we can help
Making the borrower responsible = Easier to get a loan
Yes, banks will still do their own assessment of borrowers, but they won’t have to account for the intentions of the borrower and their capacity. As a broker, I work in your best interests and are in fact legally obligated to (unlike the banks).
You’ll be in charge of the information = You’re responsible
If the changes go ahead, lenders will be able to base their assessments on the info you choose to provide. This is where having us, as your credit adviser / broker, on side will be crucial. We will assess your situation to ensure you’re confident with the amount you’re going to borrow.
Less scrutiny on your spending = Streamlined assessment
The existing expectation of fine-tooth-comb-level scrutiny takes time and has proven to be a tedious obstacle on occasions. Does your lender really need to know about your morning coffee consumption and Netflix addiction?
With the government seeking to simplify the credit process, borrowers will (in theory) get more timely access to credit with less of the back and forth on paperwork.
The earliest this will all come into effect is March next year, but we will certainly keep you informed.
As always, please reach out if you’d like some direction.