ASIC has revised Regulatory Guide 209 Credit licensing: Responsible lending conduct (RG 209) relating to the obligations on lenders in assessing borrowers’ capacity to repay under the responsible lending requirements of the National Consumer Credit Protection Act 2009 (National Credit Act).

The changes that ASIC has made include:

• clarifying that a conclusion of substantial hardship (where a borrower appears to have no obvious continued income stream for the full life of the credit contract) can often be rebutted with reasonable enquiries about the borrower’s financial situation, requirements, and objectives, such as an older person with retirement plans in place. Further guidance and examples: see RG 209.27(g) and (h), RG 209.69-RG 209.71 and new examples 6 (repayment from superannuation) and 7 (downsizing);
• providing further guidance on issues a lender should consider when assessing the relevance of income from a person – other than the borrower – in assessing the borrower’s capacity to repay. See RG 209.27(j) and the related footnote and RG 209. 89;
• clarifying that the use of sophisticated automated systems and tools for testing the reliability of information about income provided by an intending borrower may play a role in satisfying the requirements to take reasonable steps to verify such information, subject to some constraints: see RG 209.41.