Responsible Lending Policy
This policy is applicable to all employees and representatives of Speedy Finance Pty Ltd ACN 107 822 766.
Speedy Finance Pty Ltd is a responsible lender and as such complies with the National Credit Code and its obligations under applicable legislation to ensure it does not enter into a credit contract with a consumer, suggest a credit contract to a consumer or assist a consumer to apply for a credit contract if the credit contract is unsuitable for the consumer.
This policy has been adopted to ensure that Speedy Finance meets these obligations.
2. RESPONSIBILITY FOR POLICY
The person identified on the first page of this policy is responsible for this responsible lending policy and its day to day management.
3. SUMMARY OF GENERAL OBLIGATIONS
Conduct reasonable inquiries about the consumer.
The Company must, before making a final assessment of whether proposed credit contract is ‘not unsuitable’ for a consumer:
- make reasonable inquiries about the consumer’s financial situation;
- make reasonable inquiries about the consumer’s requirements and objectives;
- take reasonable steps to verify these matters.
Based on these inquiries, make a final assessment about whether the credit contract is ‘not unsuitable’ for the consumer.
The proposed credit contract will be unsuitable if, at the time of the final assessment, it is likely that:
- the consumer will be unable to comply with their financial obligations under the proposed credit contract or could only comply with substantial hardship; or
- the credit contract will not meet the consumer’s requirements or objectives.
State clearly on website, or read over phone or have customer sign Government warning re small amount credit contracts.
If requested by the consumer, give the consumer a written copy of the final assessment.
If the consumer requests a copy of the final assessment, the Company must, free of charge, give the consumer a written copy of the assessment within 7 business days.
4. ENQUIRIES TO BE UNDERTAKEN – GENERAL APPROACH
The obligation to make reasonable inquiries and to take reasonable steps to verify information is scalable - that is, the obligation varies depending on the circumstances. Therefore, employees and authorised representatives must use their professional discretion when making enquiries and must consider the prevailing circumstances.
If the consumer is an existing customer and we already hold information about the consumer, less extensive inquiries can be made about the consumer and less extensive steps can be taken to verify information. More extensive inquiries and verification would be required for a new customer.
More inquiries about the consumer’s requirements and objectives are likely to be necessary where it is evident that:
- the consumer has limited capacity to understand the credit contract;
- the consumer has conflicting objectives;
- the consumer is confused about their objectives (or has difficulty articulating them); or
- there is an apparent mismatch between the consumer’s objectives and the product being considered by the consumer.
5. SPECIFIC ENQUIRIES - CONSUMER’S FINANCIAL SITUATION
In order to comply with the general obligation to make reasonable enquiries about a proposed consumer’s financial position, employees and authorised representatives should consider making some of the following potential enquiries:
- the consumer’s current amount and source of income or benefits (this would include the nature and length of their employment—e.g. full-time, part-time, casual or self-employed);
- the extent of the consumer’s fixed expenses (such as rent, repayment of existing debts, child support and recurring expenses such as insurance);
- the consumer’s variable expenses (and drivers of variable expenses such as dependants and any particular or unusual circumstances);
- the extent to which any existing debts are to be repaid from the credit advanced;
- the consumer’s credit history; (what type of default and amount of credit enquiries in a given timeframe)
- the consumer’s circumstances, including their age (particularly where they may be a minor) and the number of dependants;
- the consumer’s assets, including their nature (such as whether they produce income) and value any significant changes to the consumer’s financial circumstances that are reasonably foreseeable (such as a change in repayments for an existing home loan due to the ending of a ‘honeymoon’ interest rate period, or changes to the consumer’s employment arrangements such as seasonal employment or impending retirement and plans to fund retirement, e.g. from superannuation or income-producing assets);
- geographical factors, such as remoteness, which may require consideration of specific issues (such as potentially higher living costs compared to urban areas); and
- indirect income sources (such as income from a spouse) where that income is reasonably available to the consumer, taking into account the history of the relationship and the expressed willingness of the earning person to meet repayment obligations.
- complete SACC (small amount credit contract) warning compliance – rebut presumption where responsible lending guidelines are still in tact
- Complete Centrelink 20% income assessment
- Complete loans in default assessment
6. SPECIFIC ENQUIRIES - CONSUMER’S REQUIREMENTS AND OBJECTIVES
In order to comply with the general obligation to make reasonable enquiries about a proposed consumer’s requirements and objectives, employees and authorised representatives should consider making some of the following potential enquiries:
- the amount of credit needed or the maximum amount of credit sought;
- the timeframe for which the credit is required;
- the purpose for which the credit is sought and the benefit to the consumer; and
- whether the consumer seeks particular product features or flexibility, and understands the costs of these features and any additional risks.
7. SPECIFIC ENQUIRIES – VERIFICATION
In order to comply with the general obligation to verify information about consumer’s financial position, employees and authorised representatives should consider the obtaining some of the following
For PAYG Employees
- Recent payroll receipts/payslips x 2
- Confirmation of employment with the employer (subject to the requirements of the Privacy Act 1988)
For self-employed consumers
- Recent income tax returns
- A statement from the person’s accountant
- Business Activity Statements
- 2 invoices or contract
For All Consumers
- Credit report
- Information/reports from other lenders (subject to the requirements of the Privacy Act 1988)
- Bank account or credit card records held by the credit provider (e.g. expenses can be verified by examining bank statements over a period of time), and other information held about an existing customer. 90 days banking for all accounts that funds are deposited to as close to the date of submission as possible.
- Proof of address and amount payable
Information provided by a credit assistance provider, should be taken into account, but generally should be verified, especially where there are reasons to doubt the reliability of the information.
8. MAKING FINAL ASSESSMENT
The Company must make a final assessment as to whether a credit contract is ‘not unsuitable’ for a consumer. As stated previously in this policy, this requires the Company to assess whether a consumer has the capacity to repay the credit contract without substantial hardship and whether the credit contract meets the consumer’s requirements and objectives.
The assessment must:
- be based on the reasonable inquiries made about the consumer plus any other relevant information available to the Company;
- specify the period the assessment covers;
- be based on a consumer’s capacity to repay a loan on the reasonable inquiries made by the Company about the consumer’s financial situation and the reasonable steps taken to verify the consumer’s financial situation;
- consider the likely maximum amount to be repaid under the credit contract (including fees) when determining whether a consumer has the capacity to repay;
- when there are two or more consumers jointly applying for a credit contract, the Company may assess each of the consumers’ capacity to repay individually or consider the reasonable inquiries made about their combined financial situation and the reasonable steps taken to verify that financial situation;
- be recorded in writing; and
- be made within 90 days before the credit contract is entered.
Depending on the consumer’s objectives, an assessment of whether a credit contract is ‘not unsuitable’ may require consideration of the contract against the background of credit contracts that are commonly available in the market.
The assessment involves a consideration of determining whether repaying a credit contract will cause substantial hardship, which in turn requires consideration of a number of factors, including:
- the money the consumer is likely to have remaining after their living expenses have been deducted from their after-tax income;
- how consistent and reliable the consumer’s income is (and the size of the loan relative to their income level), including whether a customer receives more than 50% of their income from Centrelink and therefore require 20% assessment to be completed;
- whether the consumer’s expenses are likely to be significantly higher than average (e.g. because they live in a remote area);
- the consumer’s other debt repayment obligations and similar commitments (e.g. child support);
- how much of a buffer there is between the consumer’s disposable income and the repayments;
- whether the consumer is likely to have to sell their assets, such as a car, to repay the loan; and
- how the loan will affect the living standards of the consumer;
The Company may from time to time determine whether to establish benchmarks, which if exceeded, may be taken as an indication as to whether a consumer would be assumed to be exposed to the risk of substantial hardship.
9. ASSESSING WHETHER A CREDIT CONTRACT WILL MEET A CONSUMER’S REQUIREMENTS AND OBJECTIVES
Having completed reasonable inquiries, the Company must then assess whether the credit contract is ‘not unsuitable’, which includes assessing whether it meets the consumer’s requirements and objectives (as well as whether the consumer has the capacity to make repayments.
Making an assessment that a credit contract meets a consumer’s requirements and objectives involves matching the consumer’s stated requirements and objectives with the terms and features of a credit contract that is ‘not unsuitable’.
Whether a credit contract meets a consumer’s requirements and objectives will vary depending on the circumstances, but some examples of factors that could be taken into account in making this assessment include:
- the nature of the credit requested by the consumer and the consumer’s stated objectives in obtaining the credit (based on inquiries made about the consumer);
- if the loan is to purchase a specific item, the term of the loan relative to the likely useful life of the asset;
- the interest rate and fees applying to the credit contract;
- the complexity of the credit contract, and whether a more basic product could meet the consumer’s needs;
- whether the consumer will need to finance a large final payment under the contract; and
- in relation to switching, the extent to which switching to the new credit contract will benefit the consumer.
10. REFINANCING – FURTHER ANALYSIS
If a credit application involves refinancing, it is necessary to undertake additional analysis. This would include consideration of whether entering the new credit contract:
- would result in overall cost (allowing for fees and charges) savings to the consumer that are likely to override any loss of benefits; or
- may result in minimal cost savings, but the new credit contract better meets the consumer’s requirements and objectives (e.g. because of convenience, greater flexibility or commitment level regarding repayment amounts).
This will also require the Company to make reasonable inquiries about the consumer’s existing credit arrangements before forming a view about whether the new credit is ‘not unsuitable’.
This will also require the Company to ensure that no establishment fees are charged on the existing loan payout component of the loan
12. REFINANCING WHERE A CONSUMER IS IN ARREARS
The level of inquiries that is reasonable is likely to be greater where the consumer is refinancing, particularly where they are having difficulties meeting the repayments or are even in arrears, on their existing credit contract. In this situation, it will be possible to determine that the consumer cannot meet the repayments of the amount being charged under that contract, and a contract will prima facie be unsuitable where the repayments are at the same or a similar level.
13. THE WRITTEN ASSESSMENT
The written assessment must be concise and easy for consumers to understand and include reference to the relevant factual information provided by the consumer used to assess the credit contract as ‘not unsuitable’.
The assessment should include a record of the financial information obtained and the requirements and objectives communicated by the consumer.
If the borrower’s capacity to repay the loan depends on availability of income provided by another person, the assessment should reflect this.
Commercially sensitive lending criteria does not need to be disclosed.