Commonwealth Bank of Australia has adjusted its lending policy for companies and trusts, requiring borrowers to have an existing relationship with the bank before accessing these loan structures.
The changes, effective Saturday, Nov. 22, apply to broker-introduced applications for non-individual borrowers. Under the new policy, applicants or their servicing guarantors must have maintained an established lending facility with CBA for at least six months.
“When submitting an application, brokers will need to ensure these applicants and/or the servicing guarantor have an established lending facility with CBA for at least six months,” Baber Zaka, CBA’s general manager third party banking, told The Adviser.
The established lending facility can include a home loan, business loan, personal loan, or credit card. Applications submitted before Friday will be assessed under the bank’s current policy.
CBA confirmed the changes “currently apply to broker-introduced applications as part of our efforts to simplify processes in line with our risk appetite”.
The policy adjustment follows Macquarie Bank’s decision in late October to pause all new lending to trusts and companies entirely.
Property investors often use company and trust structures to improve serviceability and access larger loans. Under these arrangements, debt is held by the trust rather than the individual, potentially allowing borrowers to take out bigger loans. However, concerns have emerged about the structures being promoted improperly.
Macquarie cited “the emergence of strategies on social media aimed at maximising lending through trusts and companies” as one reason for its decision. The bank also referenced incoming anti-money laundering regulations “which will require additional verification steps for trust and company loans, making the origination process more complex and time-consuming for banks, brokers, and customers”.
Earlier in November, the Professional Investment Consultants and Advisers group urged lenders to reassess their exposure to trust, company and self-managed super fund lending in residential property.
PICA chair Ben Kingsley highlighted concerns about investors receiving unlicensed advice aimed at rapidly building property portfolios while sidestepping regulatory requirements.
“The current level of unfettered promotion offering cookie-cutter advice, combined with relaxed credit assessment rules giving access to unlimited borrowings, is a recipe for the mischievous behaviour we are currently seeing by some operators,” Kingsley said.
Zaka said CBA regularly reviews its processes and policies to ensure they “continue to meet the needs of our customers and brokers, while maintaining responsible and prudent lending standards”.
