By Associate Professor Therese Wilson,
Dean of Law and Head of School
Griffith Law School
Under the National Consumer Credit Protection Act 2009, credit providers are required to lend responsibly. This means that before lending, the credit provider must assess the suitability of a loan for a borrower, which involves an assessment of the borrower’s capacity to repay the loan as well as an assessment of the extent to which the loan will meet the objectives and requirements of the borrower. A failure to undertake these assessments before lending will amount to a breach of the Act, which should result in sanctions ranging from enforceable undertakings to the cancellation of a credit provider’s credit licence. There is clearly a need for a robust and well-enforced responsible lending regime to curtail undesirable market practices and prevent increased financial stress on households in Australia.
The evidence that has come out of the Financial Services Royal Commission
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