RLO changes would simplify the lending process: ANZ


The lender’s CEO said the proposed changes to responsible lending obligations would make the mortgage process easier for “some” borrowers and could lead to a faster response from the bank.

Appearing before the Standing Committee on Economics hearing for the Big Four Banks and Other Financial Institutions review on Friday, April 16, ANZ CEO Shayne Elliot was questioned by a committee member and a liberal Mackellar member Jason Falinski if he was in favor of the changes. responsible lending obligations (RLO).

The National Consumer Credit Protection (Supporting Economic Recovery) Bill 2020 focuses on amending credit laws to remove RLOs and extend the best interest obligation to more of credit aid providers, among other changes.

Mr Elliott responded by saying that ANZ is “in favor of regulatory simplification” and “alignment” of regulations.

“We are subject to all kinds of regulators and regulations. Anything we can do to simplify this is ultimately beneficial, ”he said.

“It’s frankly easier to play in the market with one rulebook rather than two. “

Mr Elliott explained that under current RLO obligations, the lender must operate under “at least two rules”, including those of the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission ( ASIC).

“So simplification and alignment is what interests us,” he said.

Mr Elliott suggested that if the proposed changes to the RLO materialized, it would make the mortgage process “easier” for some borrowers, although he stressed that this would not be the case in all areas.

Mr Elliott was asked whether the proposed changes to the RLO would result in a decrease in the amount of documentation required by potential borrowers if the changes were passed by Parliament.

He responded by stating that current legislation requires a ‘one size fits all’ approach where, no matter how long a client is with the lender, the lender is obligated to collect the same amount of information and documents (such as payslips, income and expenses) and ask the same number of questions.

However, if the proposed changes were to be legislated, Mr Elliott said the bank would not need the same level of documentation.

“For example, if we have known you for 25 years, you are a good customer, we know your background and you only apply for a credit card, we may think that we don’t need to ask you the same level. of questions we would if you’re new to banking, ”Mr. Elliott said.

“For some, this may well mean that they will get a response faster.”

However, Mr Elliott stressed that it is in the lender’s best interest (rather than just a regulatory obligation) to collect information about borrowers and ask them questions to determine their suitability for a home loan or product. financial.

Mr Elliott’s comments followed those of Westpac CEO Peter King, who also told the committee last week that the RLO changes could streamline lending processes and improve mortgage approval times.

CDR a chance to be customer-centric, according to ANZ

Mr Elliott also suggested that the implementation and evolution of open banking and comprehensive credit reporting would mean that ANZ would be less dependent on requests for information from borrowers.

“We’ll just know because if you give us access to your banking history, we can literally search your bank accounts and tell you what your monthly expenses are, and we won’t need to ask you,” Mr. Elliott.

However, he tempered this by stating that it has yet to evolve to the required level.

He concluded: “We are not there yet. We’re getting better and better. “

“But certainly, it looks like a bright future and an opportunity to be truly customer-centric, to do the right thing, and to ensure that people are borrowing appropriately, and doing it quickly and at a reasonably low cost. .

The Consumer Data Right (CDR) – which underpins the open banking regime that came into effect in 2019 – allows individuals and businesses to access their own data or direct custodians to share their data with accredited entities such as banks.

Legislation to introduce CRD was passed by both Houses of Parliament in 2019.

As part of a new CDR stage implemented in November 2020, customers of the four big banks can now share their mortgage and mortgage clearing data with accredited recipients.

In a report released earlier this year on the Inquiry into Future Directions in Consumer Data Law, it was recommended that third parties be given a ‘take action’ where they could take action beyond data sharing requests.

Regarding mortgages, the survey added: “The change can be greatly simplified by allowing electronic filing of applications in standardized forms by accredited persons on behalf of consumers and could be activated by launching an action. . “

If such a change were implemented, accredited persons might therefore be able to design services offering to undertake these actions independently or in combination with data sharing services, he added.

In October 2020, the Australian Competition and Consumer Commission (ACCC) launched a consultation on expanding CDR rules to allow more financial services professionals and ‘trusted advisors’, such as brokers , to receive consumer data with the consent of consumers.

In December 2020, the competition watchdog released guidelines for those who want to become accredited to access CDR data, including intermediaries. The guide describes how applicants can file a valid application to become an accredited person.

[Related: RLO changes could boost turnaround times: Westpac]

RLO changes would simplify the lending process: ANZ

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Last updated: April 17, 2021

Posted: April 19, 2021

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Malavika Santhebennur

Malavika Santhebennur

Malavika Santhebennur is the Mortgage Securities Editor at Momentum Media.

Prior to joining the team in 2019, Malavika held positions at Money Management and Benchmark Media. She has been writing about financial services for six years.

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