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Fronting the House of Representatives’ standing committee one economics, chief executive of the Commonwealth Bank of Australia (CBA) Matt Comyn was asked to identify which of commissioner Kenneth Hayne’s enquiries elicited the most concern.
Committee member and Labor MP Matt Keogh asked: “Before the report was handed down, what was the recommendation you were most concerned might be made, but wasn't?”
Mr Comyn replied: “There are a number of areas that, if you look at the scope of the commission's work, particularly as you would appreciate within our banking businesses and the size of our balance sheet and the extension around responsible lending.
“I think some of those recommendations were very important, in terms of what the commissioner's findings were.
“They were certainly some of the recommendations that I looked to first after receiving the report.”
Commissioner Hayne opted against making formal changes to the National Consumer Credit Protection (NCCP) Act for direct lending or revisions to the “not unsuitable test” to address concerns raised over the assessment of loan applications.
“The NCCP Act should not be amended to alter the obligation to assess unsuitability,” commissioner Hayne said.
The commissioner’s determination came amid mounting concerns over the availability of credit following the tightening of lending practices in response to public scrutiny.
Analysts have observed that tighter underwriting standards have softened demand for credit, and in turn, stunted growth in the housing market.
According to the latest CoreLogic figures, national dwelling values fell by 6.3 per cent in the 12 months to February 2019, largely spurred by a 7.6 per cent decline across Australia’s capital cities, particularly in Sydney and Melbourne where home prices declined by 10.4 per cent and 9.1 per cent, respectively.
Housing approvals data from the ABS has also revealed that, while increasing by 2.5 per cent in January, approvals are down by 29 per cent year-on-year.
The latest Financial Aggregates data from the RBA has also shown that in the year to January 2019, housing credit grew by 4.4 per cent, slowing by 1.9 per cent when compared with growth of 6.3 per cent reported in the 12 months to 31 January 2018.
However, the Australian Securities and Investments Commission (ASIC) recently announced that it will undertake a review and consider changes to its responsible lending guidelines.
ASIC’s guidance has been in place since 2010 when the responsible lending laws were first introduced, but has not changed since its inception.
The regulator has claimed that it “considers it timely” to review and update the guidance in light of its regulatory and enforcement work since 2011, changes in technology, and the release of the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry,
ASIC added that its review of RG 209 will consider whether the guidance “remains effective” and will seek to identify changes and additions to the guidance that “may help holders of an Australian credit licence to understand ASIC’s expectations for complying with the responsible lending obligations”.
Submissions on the update of ASIC’s guidance on responsible lending have been welcomed from any interested parties.
[Related: Comyn questioned over home loan referral conflicts]
Comments (7)
View also the proliferation of class actions and the fact lawyers, who charge by the hour and are thus better rewarded the longer their cases run (conflict of interest anyone?) and you have an industry ripe for a Royal Commission. But given that almost all politicians are lawyers - I won't be holding my breath.