Banks welcome dropping of credit laws
Australia's major banks have welcomed the shake-up to the country's credit laws, claiming the red-tape-cutting reform will boost the economic recovery from the coronavirus pandemic.
Commonwealth Bank, ANZ, NAB and Westpac have embraced the Federal Government's ditching of responsible lending obligations that will result in lenders being subject to one less rule when providing loans to customers.
The laws were first introduced by the Rudd Labor government in 2009 and sparked a heated court battle between Westpac and the corporate regulator.
It has previously been reported the lending obligations were tightening up access to credit as banks were becoming too conservative about providing debt to customers.
Westpac chief executive Peter King said the removal of a one-size-fits-all approach to lending would speed up the process for customers to be approved for new loans.
"These enhancements would enable us to assess loan applications across specific lending products rather than a one-size-fits-all approach," Mr King said.
"We will be able to streamline our processes, making it an easier and simpler process for customers."
CBA said the simplification, which removes the Australian Securities and Investments Commission from enforcing lending rules, strikes a balance between protecting consumers while reducing onerous rules applicable to lenders
"We will work through the detail of the proposals, but as a principle we support any attempts to reduce regulatory burden while continuing to ensure that consumers are protected," a CBA spokesman said.
The Banking Royal Commission had flagged the need to simplify lending rules, as access to credit was being squeezed by lenders that had became overly cautious due to regulation.
The Australian Banking Association (ABA) noted the reform removed duplication and overlap between the banking regulators.
"It is important to ensure that these changes strike the right balance between maintaining strong consumer protections while providing credit into the economy at a critical time," ABA chief executive, Anna Bligh said.
Ongoing oversight of responsible lending will be enforced by the Australian Prudential Regulation Authority.
ANZ chief executive Shayne Elliott said the simplification would ensure Australians would have quick access to credit during the economic downturn.
"The Government, industry and regulators have shown flexibility in the response to the pandemic, and this decision will support the economy and customers at a crucial time," Mr Elliott said.
NAB said it was committed to responsible lending and would work with regulators and the Government on the changes to the rules.
"NAB is committed to lending responsibly and appropriately," a NAB spokesman said.
"It is not in customers' interests to borrow money which they cannot afford to repay, and banks still need to be alert to helping customers avoid stress."
Originally published as Banks welcome dropping of credit laws