An updated regulatory guide released by ASIC provides further guidance and clarity for lenders on assessing borrowers' capacity to repay under the responsible lending requirements of the National Consumer Credit Protection Act 2009 (National Credit Act).

ASIC Commissioner Peter Boxall said: 'We are concerned by reports of older borrowers whose employment will reduce, or cease, before the end of the loan term, being refused loans because some lenders are adopting an unnecessarily restrictive approach to meeting the responsible lending requirements. Undertaking the range of enquiries required by the legislation will often reveal other ways that they will be able to repay the loan.'


'The new responsible lending requirements in the National Credit Act are an important protection for consumers, but they should not be an inflexible barrier to credit for any segment of the population, and should not prevent consumers obtaining credit that they can reasonably afford.'


The changes that ASIC has made include:

  • clarifying that a conclusion of substantial hardship (where a borrower appears to have no obvious continued income stream for the full life of the credit contract) can often be rebutted with reasonable enquiries about the borrower's financial situation, requirements, and objectives. Further guidance and examples: see RG 209.27(g) and (h), RG 209.69-RG 209.71 and new examples 6 and 7
  • providing further guidance on issues a lender should consider when assessing the relevance of income from a person - other than the borrower - in assessing the borrower's capacity to repay. See RG 209.27(j) and the related footnote and RG 209. 89

ASIC has also clarified that the use of sophisticated automated systems and tools for testing the reliability of information about income provided by an intending borrower may play a role in satisfying the requirements to take reasonable steps to verify such information, subject to some constraints: see RG 209. 209.41.

The responsible lending obligations in the National Credit Act were phased in from 1 July 2010. Businesses engaging in consumer credit activities (including banks, credit unions, finance companies, brokers, and pay-day lenders) were subject to the responsible lending obligations beginning from 1 January 2011.

For more information about the consumer credit regime, including relevant policy announcements, and regulatory guidance, please see the credit pages at