Credit guide

Credit providers, credit assistance providers (such as mortgage and finance brokers), and credit representatives are required to provide a consumer with certain disclosure documents before entering into a consumer credit contract (or consumer lease).

As part of the responsible lending obligations of a licensee, the pre-contract disclosure obligations may require providing a credit guide to consumers.

This guidance note explains the requirements of a credit guide, exemptions to providing a credit guide, and practice tips for credit guides.

See Credit guide.

Credit quote and credit proposal disclosure document

Credit providers, credit assistance providers (such as mortgage and finance brokers), and credit representatives are required to provide a consumer with certain disclosure documents before entering into a consumer credit contract (or consumer lease).

As part of the responsible lending obligations of a licensee, the pre-contract disclosure obligations may require a quote for providing credit assistance or a credit proposal disclosure document (or lease proposal disclosure document) be provided to consumers.

This guidance note explains the requirements of a Credit quote and credit proposal disclosure document, exemptions to providing a Credit quote and credit proposal disclosure document, and practice tips for Credit quote and credit proposal disclosure document.

See Credit quote and credit proposal disclosure document.

Reasonable inquiries regarding consumers’ requirements, objectives and financial situation

Licensees are required to conduct an unsuitability assessment to discharge their responsible lending obligations. Part of undertaking this assessment requires licensees to make reasonable inquiries about:

• • the requirements and objectives of the consumer; and
• • the consumer’s financial situation.

This guidance note explains:

• • Who needs to make enquiries and why?
• • When a licensee needs to make reasonable enquiries?
• • Scalability of reasonable enquiries?
• • Different threshold of inquiry for credit providers and credit assistance providers.

The guidance note also provides an overview of prescribed enquiries for specific matters, such as reverse mortgages.

See Reasonable inquiries regarding consumers’ requirements, objectives and financial situation.

Reasonable steps to verify the consumer’s financial situation

Licensees are required to conduct an unsuitability assessment to discharge their responsible lending obligations. Part of undertaking this assessment requires licensees to take reasonable steps to verify the consumer’s financial situation.

This guidance note explains the requirements of licensees to verify consumer’s financial situations, the steps to be taken, and provides an overview of prescribed matters to be verified.

See Reasonable steps to verify the consumer’s financial situation.

Unsuitability assessment

Licensees are required to conduct an unsuitability assessment to discharge their responsible lending obligations. Part of undertaking this assessment requires licensees to conduct a preliminary (for credit assistance providers) or final (for credit providers) assessment of unsuitability and make a determination as to whether the contract would be not unsuitable.

This guidance note explains the factors to be considered in undertaking an unsuitability assessment, when the unsuitability assessment should be conducted, what information should be used in the assessment, and explains the concept of “substantial hardship”.

See Unsuitability assessment.

Special responsible lending requirements for small account credit contracts (SACCs) and reverse mortgages

For SACCs there are additional information and verification actions a licensee must take in considering whether the contract would be unsuitable. These include obtaining and checking bank statements, where applicable, and inquiries as to other SACC loans the consumer may have had within the preceding 90 days.

If the credit contract is a reverse mortgage a licensee must make additional inquiries and verifications about the consumer’s requirements and objectives in meeting future needs and the information to be taken into account when making equity projections.

See Special provisions for SACC and reverse mortgages.

Special provisions for credit card contracts

The Treasury Laws Amendment (Banking Measures No. 1) Act 2018 (Cth) (Amending Act) has amended the National Consumer Credit Protection Act 2009 (Cth) (NCCPA) and the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) to tighten responsible lending obligations by credit card providers for credit card contracts.

The guidance note explains the key reforms relating to credit cards and provides practice tips for credit providers.

See Special provisions for credit card contracts.