BoQ told to tighten home lending practices

BoQ told to tighten home lending practices
Jonathan ChancellorDecember 7, 2020
The Bank of Queensland (BoQ) has been ordered to improve its home lending practices after the Australian Securities and Investments Commission (ASIC) found they were not consistent with the National Credit Act.
 
ASIC was concerned that BoQ was using a benchmark figure, the Henderson Poverty Index (HPI), to estimate the living expenses of consumers applying for home loans, instead of asking them about their actual expenses, when assessing loan suitability.

"In ASIC's view, the lack of enquiry about actual expenses, and sole reliance on HPI, was not consistent with responsible lending obligations imposed by the National Credit Act," the regulator said.

"Bank of Queensland has updated its home loan application forms to obtain more information about a customer's living expenses."
 
From this year, the bank has also been using the higher of the customer’s supplied figure or that new benchmark, BoQ’s chief risk officer Peter Deans wrote on the bank’s website.

“We have also been examining customer’s declared expenses more closely to determine the loan repayments they can afford,” he wrote.

ASIC acknowledged the co-operation of Bank of Queensland in resolving this issue.

ASIC notes that the bank will continue to review the circumstances of borrowers who go into hardship or default to ensure that they have not been disadvantaged by a loan provided prior to the change in policy.

ASIC Deputy Chairman Peter Kell said the outcome was part of ASIC’s ongoing focus on the lending industry’s compliance with responsible lending laws. 

"Lenders must carry out inquiries to determine whether a credit contract will be unsuitable for a consumer," Peter Kell said.

In November 2014, ASIC updated Regulatory Guide 209 Credit licensing: Responsible lending conduct (RG 209) to clarify that credit licensees cannot rely solely on benchmark living expense figures, and must also make inquiries about the borrowers’ actual living expenses.

 

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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