ASIC changes Bank of Queensland lending practices

Bank of Queensland (the Bank) has changed the way it assesses home loan applications following concern from ASIC that the Bank had not been complying with responsible lending laws. 

The Bank had been using the Henderson Poverty Index (the Index) as a benchmark figure to assess the suitability of its consumers applying for a home loan. By using the Index, the Bank had only been estimating the living expenses of consumers without making proper inquiries into each individual’s actual expenses. 

ASIC updated its responsible lending guidelines, in line with the National Credit Act, to reinforce that credit licensees have a duty to make inquiries into a consumer’s financial situation, in order to ensure that only consumers who are able to meet their repayment obligations without substantial hardship, are placed in credit contracts. 

ASIC considered the Bank’s conduct to be inconsistent with its responsible lending obligations under the National Credit Act. The Deputy Commissioner of ASIC, Peter Kell, said:

“Lenders must carry out inquiries to determine whether a credit contract will be unsuitable for a consumer. Using benchmark figures such as the Henderson Poverty Index alone to estimate a consumer’s financial position is not sufficient to meet this requirement.”

Bank of Queensland has changed its loan suitability assessment procedures and will use “the higher of either, the living expense figure supplied by the customer, or an appropriate benchmark figure.” 

The Bank has also updated its home loan application forms in order to obtain more information about their customers’ living expenses and is committed to the continued review into the circumstances of its borrowers. 

Scroll to Top