Responsible lending requirements for mortgage brokers will kick-in on 1 January next year, following updates to the government's implementation table.
The same requirements pertaining to banks, non-banks and other ADIs along with registered finance corporations (RFCs) will only kick in a year later (1 Jan 2011).
Under the proposed new credit rules, responsible lending has two core elements: "If a loan is considered to be unsuitable for a consumer; and if they do not have the capacity to repay the loan, they will not be provided with the loan".
The timetable for implementing other responsible lending obligations including disclosure requirements, such as upfront disclosure of broker fees and charges, remains unchanged and only kicks on 1 July 2011.
"Bringing forward responsible lending conduct laws to apply to brokers and some lenders ensures that consumers can be immediately protected from any predatory and irresponsible lending," said financial services minister Chris Bowen.
"While it is recognised that many brokers and lenders already meet these requirements through industry codes and standards, it will set a national standard for responsible lending and prohibit poor credit practices at an earlier stage. It will also allow consumers to access remedies for irresponsible lending sooner."
"Importantly, under this new timetable for reform, there will be no gap in consumer protection between the 'turning off'; of the State and Territory credit regimes and the 'turning on'; of the new Commonwealth regime with these crucial responsible lending requirements," the minister added.
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