The latest ASIC report on relief decisions gives one example (section G) of ASIC’s approach to giving relief from the responsible lending obligations and, at the same time, the scope of the National Credit Act.

The particular example concerned a life insurer’s credit contracts known as ‘Loans on Policy’, whereby ‘Whole of Life’ and ‘Endowment Life Insurance’ policy holders are entitled to borrow against the accrued policy surrender value from time to time.

In this case conditional relief allowing the insurer to comply with the obligations from 1 January 2011 (rather than from 1 July 2010) was granted on the basis that:

• it was merely delaying the commencement of the obligations, consistent with the commencement date of the obligations for some other bodies regulated by the Australian Prudential Regulation Authority (APRA); and
• it would give the life insurer and ASIC more time to consider the substantive issue of whether relief should be granted from the obligations on an industry-wide basis.

Relief was granted on the condition that the Loans on Policy are administered by the life insurer as limited recourse loans.