Pepper Money has become the first non-bank lender to be approved as a member of the Australian Finance Industry Association (AFIA) Finance Industry Code of Practice (Code), marking a milestone for Australia’s non-bank lending sector. The Code is set to take effect on 1 October 2026, following a transition period for AFIA members to align their systems, policies, and practices.
AFIA chief executive officer Diane Tate said the approval reflects the high standards already operating within the sector.
“The AFIA Code puts customers first. It is designed to ensure positive outcomes by promoting good industry practices, supporting compliance with legal obligations, and strengthening trust and confidence in Australia’s finance industry,” Tate said. “Pepper Money’s decision to sign on early demonstrates how responsible lenders already operate to high standards and are committed to continuous improvement in their DNA.”
Tate added that the Code’s influence was expected to grow as additional members joined by the October deadline.
Pepper Money chief executive officer Mario Rehayem, who has served as AFIA chair since March 2024, said the formal signing reflected his company’s longstanding lending philosophy.
“For more than 25 years, Pepper Money has built its reputation on really helpful, responsible lending,” Rehayem said. “By formally signing the AFIA Code, we’re reinforcing the customer first standards that already guide the way we lend. This is about strengthening protection for customers and raising expectations across the non-bank lending sector.”
The Code will be independently monitored by the Finance Industry Code Compliance Committee (FICCC) and covers commitments including fair and responsible lending, plain English communication, and protections for customers at risk of domestic violence or financial abuse.
The approval comes as non-bank lenders play a growing role in Australian finance. According to AFIA’s inaugural Residential Mortgage Non-Bank Lenders (RNBL) report, published in December 2025, non-bank lenders helped 51,000 Australians buy a home in FY25, with $72.2b in home loans across surveyed AFIA members.
The same report found that early-stage arrears among non-bank lenders remained low at 0.67%, compared with major banks at 0.58%, while 90-plus-day arrears were lower for non-banks at 0.81%, against 1.10% for major banks.
The Reserve Bank of Australia’s April 2025 Financial Stability Review noted the expansion of non-bank lenders as banks tightened lending standards and regulatory buffers constrained credit supply. In 2024, major banks’ share of broker-originated home loans fell below 40%, to around 36%.
Rehayem said the Code represented a positive development for the broader sector.
“The AFIA Code gives customers greater clarity and confidence,” he said. “It makes existing protections more visible, and ensures a higher, more consistent level of customer support across our industry.”
“This is a positive step for our industry and a win for customers,” he added. “We’re proud to lead by example and support a more transparent, resilient and customer focused non-bank lending sector.”
Non-bank lenders in Australia are licenced credit providers regulated under frameworks administered by multiple regulators, including the Australian Securities and Investments Commission. AFIA said more than 80% of all hardship applications received by residential non-bank lenders in FY25 were approved.
The broader Australian mortgage and lending market has shown notable dynamism through late 2025 and into early 2026, reflecting both competitive pressures and shifts in borrower behaviour. According to recent figures from the Australian Bureau of Statistics, the value and volume of new housing loans reached record levels toward the end of 2025, with the total housing loan book rising to $115,180m and new loans growing around 15% year-on-year in Q4 2025. Owner-occupier and investor segments both contributed to this rise.
Data from Equifax’s consumer market reports shows a sharp increase in mortgage credit demand late last year, with enquiries up about 12.3% compared with Q4 2024 – the strongest growth seen since 2021.
Competition in the mortgage market has also fuelled a refinancing surge. Close to 700,000 borrowers renegotiated or switched home loans over the past year, with nearly two-thirds moving to a new lender rather than staying with their original provider. Industry commentators say this trend has placed added pressure on major banks to retain business by sharpening pricing and product offers.
Mortgage broker channels remain influential in shaping borrower outcomes. Data from the Broker Pulse: Residential Lending survey indicates that non-bank lenders such as Pepper Money continue to hold meaningful broker experience scores relative to peers, helping sustain their appeal in an environment where brokers increasingly prioritise client circumstances and turnaround times.
Industry projections point to continued expansion of Australia’s alternative lending market through the latter part of the decade. Research forecasts that the alternative lending sector, including non-bank mortgage and consumer credit, will grow steadily through 2029, potentially reaching around US$33.6b in size as demand for flexible credit and digital distribution channels rises.
