The Australian Financial Complaints Authority (AFCA) has published a consultation paper seeking feedback on its draft Responsible Lending Approach (61 pages) on how AFCA will consider responsible lending complaints about different credit products including:

• how it will assess a financial firm’s compliance with responsible lending obligations;
• how it will apply legal principles, industry codes and regulatory guidance when considering complaints about responsible lending;
• how it will determine a fair outcome where a firm breaches its responsible lending obligations;
• how it will calculate loss and assess benefits to determine compensation; and
• how it will consider all the circumstances to determine an outcome that is fair to all parties.

Scope of approach

Responsible lending complaints are complaints about credit contracts regulated by the National Consumer Credit Protection Act 2009 (Cth) (National Credit Act).

AFCA says it cannot usually consider a complaint about a lender’s decision to decline to provide a loan. However, it may be able to consider a complaint about a lender’s decision if it relates to a breach of a contractual or legal obligation. For example, AFCA may be able to consider the complaint if the borrower says the lender:
• unlawfully discriminated against them when deciding to decline a loan, or
• made an error when declining a request to substitute a security property for an existing loan.

The approach document does not apply to complaints about lending to small businesses or other credit contracts not regulated by the National Credit Act.

Brokers and other credit assistance providers also have responsible lending obligations under the National Credit Act. However, this approach focuses on the obligations of credit providers.

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