Updated RG209: our take
On Monday this week, ASIC published the long-awaited update to RG209: Responsible Lending Conduct. We’ve reviewed it and wanted to share our initial thoughts below
On the whole, it is a much clearer document with simpler language and more practical examples included. It remains a principle-based set of guidelines rather than a prescriptive set of rules, and although this will frustrate some people; it now includes extra content on topics such splitting of expenses, use of statistical benchmarks, online broking, business purpose lending and the use of file notes.
It clearly reinforces and actually strengthens the responsibility placed on the broker/lender to apply their own ‘reasonable’ judgement. It further emphasises the need to utilise documents and tools at hand to confirm what has been disclosed by a consumer and should discrepancies arise, these must be further inquired upon. For example, if the broker has a credit report or bank statements provided these must be analysed and compared to the details declared by the consumer. If this raises discrepancies, extra inquiry and validation is needed. This is not new, but again further clarified!
A key takeaway from the updated RG209 is the increased importance of file notes and record keeping.
It is clear that ASIC wishes to reinforce the need for brokers and lenders to keep comprehensive records, including how the assessment of loan (un)suitability was arrived at. There are sections of the new RG209 dedicated to record keeping and guidance is provided re: the importance of understanding and recording the consumer requirements and objectives and how the financial position was validated. If you’ve been following our view over past months, you know we completely agree and we’re pleased to see it emphasised within the new Guidelines.
Upon first glance, it would be easy to criticise the update as being a lot of fuss about not much. However, when carefully reviewed we believe it is definitely an improvement. When reading the document as a whole it also relays a more common-sense approach.
If you’re a Finance Broker, Lender or general participant in the regulated consumer lending market we strongly recommend you download yourself a copy and read thoroughly. As mentioned earlier, it is a relatively easy read and as the old saying goes “knowledge is power”.
One of SalesKey’s primary objectives is to share our knowledge and expertise so that regulatory compliance requirements are easier to understand. To that point, feel free to call us with any questions you may have on the new Guidelines. We’d be happy to walk you through our interpretation. Don’t hesitate to call us on 1800 954 488 or drop us an email at info@saleskey.com.au.
Regards and Merry Christmas,
Scott and Darren.