We open discussion on several key issues that are continuing to affect the industry.

—— Hayne Royal Commission outcomes
—— The Best Interests Duty – how responsible lending will be affected by Mortgage broker best interests duty – what are the requirements and objectives
—— Mortgage broker remuneration reforms
—— Responsible lending and sales incentives
—— A revised RG209 and how brokers are responding

Discussing the Small Amount Credit Contract Review (SACC) we look at a recent report by the Stop the Debt Trap which highlights the significant issues around this type of predatory lending. What the statistics reveal is frightening and the devastation this type of credit is causing should be the concern of every financial institution. We look at why certain states reflect greater use of this style of lending and why women and especially vulnerable women fall prey. The Government is being called to pass critical protections into law to stop the harm caused by payday loans.

ASIC’s revised RG209 has placed a spotlight on where lenders will obtain accurate information from a consumer in order to make an informed decision about the borrower’s capability to repay the loan. Data will play a central role in the verification process and with open banking we will for the first time be able to provide institutions with real-time accurate data. What the lender will do with this data is important and how this will start to impact the industry is yet to be seen. We discuss how data will transform this industry and impact lending decisions.

Technology is at the heart of the transformation taking place in the industry, from automated solutions bringing greater accuracy and insights to better manage credit risk to artificial intelligence that will enhance credit risk assessment tools with fast and accurate analysis of comprehensive credit data reporting ensuring verification is seamless in areas such as repayment history, income verification, analysis of employment data and bank transaction data. We expect that technology will assist a lender to meet their obligations for responsible lending criteria under the National Consumer Credit Protection Act 2009:

1. make reasonable inquiries about the consumer’s requirements and objectives
2. make reasonable inquiries about the consumer’s financial situation
3. take reasonable steps to verify the consumer’s financial situation.

These three criteria have been the focus of the Royal Commission into Misconduct in Banking, Superannuation and Financial Services Industry; the Australian Securities and Investments Commission’s (ASIC) new Regulatory Guide 209, and the Australian Prudential Regulatory Authority’s proposed Prudential Standard 220 – Credit Risk Management standard.

The Consumer Action Law Centre in their submission to ASIC has claimed that ‘automated lending systems have protected lenders’ credit risks and have not protected people from loans which are harmful’. How can technology assist the industry to ensure this is not the case? How do we re-think decision flows using automation to ensure this is not the case? Is the answer to automate our design and distribution obligations?