ASIC has announced that the Commonwealth Bank of Australia (Commonwealth Bank) will review its lending practices in Indigenous communities in South Australia, Far North Queensland and the Northern Territory.

The review follows an investigation by ASIC and the South Australian Office of Consumer and Business Affairs (OCBA) into personal loans arranged for borrowers in Far North Queensland, the Torres Strait, and the Anangu Pitjantjatjarra Yunkatjatjarra (APY) Lands and Port Augusta region in South Australia. The loans were arranged by a number of different brokers.

This action follows concerns about the eligibility criteria used by the Commonwealth Bank to assess loans, and discrepancies in some loan applications submitted by the brokers. As a result, some loans left borrowers over-committed and unable to afford the repayments.

ASIC’s Acting Executive Director of Consumer Protection, Ms Delia Rickard, said the majority of loans were for $20,000 or less to purchase second-hand motor vehicles, and that many of the borrowers were dependent on Centrelink payments for their incomes.

The Commonwealth Bank has implemented new lending procedures and assessment criteria following an extensive review. The Bank has also agreed to review the loans of approximately 400 borrowers
from remote communities experiencing any hardship in meeting the repayments under their loan.

The Bank has also agreed to fund a dedicated financial counsellor for remote communities for an initial period of three years.