Veda Advantage is committed to providing credit businesses with the tools and solutions needed to meet their requirements and obligations for good practice credit risk management in a changing and competitive market place.
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Responsible Lending
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Responsible Lending
Credit Licensing
"As a credit licensee, you must decide how you will meet the responsible lending obligations.......Meeting your responsible lending obligations will require taking three steps:
- make reasonable inquiries about the consumer's financial situation, and their requirements and objectives;
- take reasonable steps to verify the consumer's financial situation; and
- make a preliminary assessment (if you are providing credit assistance) or final assessment (if you are the credit provider) about whether the credit contract is 'not unsuitable' for the consumer (based on the inquiries and information obtained in the first two steps).
In addition, if the consumer requests it, you must be able to provide them with a written copy of the preliminary assessment or final assessment (as relevant)."
Source: ASIC Regulatory Guide 209: Credit licensing: Responsible lending conduct (February 2010)
What is NCCP?
The National Consumer Credit Protection (NCCP) Act is one of many developments in Australia's credit risk landscape changing the way credit providers and credit assistance providers conduct their business.
The National Consumer Credit Protection Act is a new Commonwealth law that includes the old state based Uniform Credit Code. It enforces reponsible lending obligations on all licensees. To find out more about the new National Consumer Credit Protection obligations visit ASIC.
These new responsible lending obligations will require major change to application processes for many licensees.
Implementing responsible lending requirements
Veda Advantage research* suggests many Australian mortgage brokers, credit providers and finance companies are unsure how to implement responsible lending requirements, despite registering ahead of the 30 June 2010 deadline for the Federal Government's National Consumer Credit Protection (NCCP) law - encompassing 'responsible lending' obligations.
*Veda Advantage quantitative and qualitative research consisted of around 50 face-to-face as well as phone interviews with mortgage brokers, credit providers and financial institutions, over April to June 2010.
Veda Advantage has developed a five step plan to help with responsible lending.
Making the best use of existing data
New responsible lending laws require you to make reasonable inquiries* about applicants using robust credit risk management processes and the best available information. The key is to distinguish which applications need further scrutiny to comply with the new law and which do not.
Veda Advantage's credit reports are a valuable tool to help you distinguish applications needing further scrutiny. Existing Veda Advantage credit reports contain unique and valuable information to identify higher risk applications.
Current Veda Advantage credit reports are one of the only data tools available that can help you identify undisclosed liabilities in order to verify financial circumstances* as required under the National Consumer Credit Protection Act.
Veda Advantage holds the largest consumer credit database in Australia with data on 16.5 million credit active individuals. The breadth and depth of this coverage provides a comprehensive and reliable view of consumer credit applications.
Contact us to find out how Veda Advantage credit reports' unique data can help.
* ASIC Regulatory Guide 209: Credit Licensing Responsible Lending Conduct (February 2010)
For more information on how Veda Advantage can help with responsible lending please contact us.
