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11 lenders implicated in ASIC home loan investigation

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Australian Broker | 02 Mar 2017, 01:07 PM Agree 0
The regulator has revealed it has been in discussions with 11 banks in its ongoing enquiries around responsible mortgage lending
  • Simon | 02 Mar 2017, 01:27 PM Agree 0
    There is now a substantial niche for a progressive lender to come to market with "realistic" assessments of true expenses.

    As compliance calls for greater documentation and scrutiny, there presents the potential for adoption of "true" historical expenses as method of calculating servicing. For many people, the hurdles artificially enforced to obtain finance leads to negative outcomes.

    Especially in lower socio-economic and regional areas, where it is common for basic rent expenses to far exceed equivalent mortgage loan repayments (even at a deemed figure of 7% for example). If someone has consistently proven they can afford a rental payment of $300pw whilst maintaining perfect credit behaviours, is it reasonable to then state they cannot afford a mortgage with a P&I repayment of only $230pw?

    The adoption of HEMs - in and of itself - as a baseline expense for servicing calculations without consideration of the applicants actual expenses is a misappropriation of data. (The methodologies of the HEMs figure calculations are available online). The current methodology applied (higher of HEMs or actual) is an understandably conservative step towards a true assessment, however the current climate of investigation and accusation is not conducive to any potential reduction of "minimum".

    I welcome increases in compliance requirements - presuming they lead to improved customer outcomes.

    At present, they simply lead to more work, without any associated benefit to the consumer.
    • Stephen Rasmussen | 02 Mar 2017, 03:30 PM Agree 0
      Well put Simon!
  • Papery | 02 Mar 2017, 01:28 PM Agree 0
    But the loans identified are either within or ahead of arrangements..... maybe ASIC should be considering how current assessment policy vs reality vs regulation is out of step with everyday reality......Chicken Little...I think the sky is falling again!
  • Dean | 02 Mar 2017, 01:42 PM Agree 0
    Really a bank that does not adhere to the requirements of the responsible lending act....where is the surprise in that?
  • David | 02 Mar 2017, 01:50 PM Agree 0
    So did ASIC simply go searching to create a problem out of nothing to justify their existence? Yes, Westpac used to service interest only loans at the actual repayment plus a buffer and the remaining 25 year repayment amount would have been higher than a 30 year term. Is there any evidence that people were struggling to cope after 5 years though? You'd expect that the borrower's income would have increased over that time, improving their ability to service the loan.
  • Ed Ridge | 02 Mar 2017, 02:09 PM Agree 0
    How many brokers our aggregators have they spoken to? You would think Aussie and mc would be in that mix as well. Regulation remuneration enquiry constant battle with suppliers makes me wonder what the hello i am doing playing in an uneven sandbox.
  • Rodney | 02 Mar 2017, 02:19 PM Agree 0
    ASIC should stick to making running shoes.
  • marty mcdonald | 02 Mar 2017, 03:46 PM Agree 0
    Their in branch paper applications asked for living cost estimates from customers but then when data was entered into their in house equivalent of applyonline by the branch lender the data around living costs was not entered as wasn't asked for in the electronic version. Nor was there a spot for it in their servicing spreadsheet. Oh dear....
  • Mike | 02 Mar 2017, 03:57 PM Agree 0
    So ASIC are going to penalise the banks for irresponsible lending practices (in it's eyes) when there have been no defaults. Perhaps Westpac knows more about lending than ASIC - after all they have been around for 200 years. ASIC has only been the policeman for six years - why is it the expert? I do not think any bank would lend money if they thought there was a high chance of default. All ASIC has done is create more paperwork (that gets thrown in a bin by the consumer) and reduced flexibility of lenders to think outside the square and actually help some clients who may be in financial difficulty. It has also created a nice little cash cow for training providers.
    And still not a level playing field. Much less paperwork to get finance for a car at a car dealership compared to a broker - and who charges more - the dealership of course. So much for protection of the consumer.
    Government red tape at its finest.
    • Really? | 04 Mar 2017, 03:47 PM Agree 0
      Couldn't agree more Mike...
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