ASIC's Emma Curtis explains what the regulatory board means by the 'reasonable steps' to be taken by brokers to verify income.
Video transcript below:
Reporter: There has been some confusion recently about what constitutes reasonable steps to verify income. We spoke to Emma Curtis of ASIC, who explains that the issue is the definition of reasonable steps is scalable depending on the circumstances.
Emma Curtis, Senior Manager, Deposit Takers, Credit and Insurers, ASIC
Emma Curtis: ASIC’s issued regulatory guide 209, which sets out our expectations about compliance with the responsible lending requirements and that includes the verification requirements. So the obligation is to take reasonable steps, it is a scalable obligation, so it will vary depending on the circumstances, but brokers do need to make sure that if they have any concerns about the information that they don’t pass it on to prospective lenders and in some cases it may be appropriate to provide information to police if they have concerns about fraudulent conduct.
Reporter: Curtis explains that ASIC is seeing many differing examples of document inconsistencies.
Emma Curtis: Some examples that we have seen of documents which raise suspicions are where there is inconsistencies in the documents that can’t be explained. For instance, discrepancies in the letterhead or the company name and ABN, issues with colour use or fonts or graphics, issues where pay slips includes dates that aren’t consistent or where salary ranges are provided for occupations that aren’t necessarily consistent. Brokers could contact employers to confirm their employment if they have questions around that aspect or they can take further steps to seek further information.
Reporter: Curtis urges brokers to further familiarise themselves with credit legislation and ASIC’s guidance on the subject.
Emma Curtis: It’s very important for brokers to familiarise themselves with the requirements of the credit legislation and that includes ASIC’s guidance on the issue. The requirement is to take reasonable steps to verify the information and to verify that to a reasonable standard before steps are taken to assess whether the product is suitable for the consumer or not. The obligation is scalable, so it will depend on the circumstances and if they do have concerns about the information, as I said previously they shouldn’t provide that to the lender and they may need to report issues to the police if they have concerns about fraudulent information being provided to them.