Australia’s Responsible Lending Reforms: A Step in the Wrong Direction

Australia’s lending standards and responsible lending practices have been prominent topics amongst banks and regulators in recent years, with potentially broad implications for both lenders and borrowers. Based on the critical issues raised by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in 2019 and the recently concluded Wagyu vs. Shiraz legal case, it is clear that change is needed, whether to the rules themselves or how compliance with the rules is managed.

In this article, we address the issues uncovered by the Commission and provide steps lenders should take when providing a credit contract or a credit limit increase.