Suspend Streaming Services To Secure A Bank Loan
ASIC has made a significant update to its responsible lending guidelines to reduce the frequency of consumers becoming trapped in unsustainable loans, which has included the advice to consider suspending monthly streaming services to secure a loan.
According to ASIC, lenders should be inquiring with customers over lifestyle choices such as whether they send their kids to public school or if they pay for monthly streaming services in order to determine a consumers eligibility for a loan.
The new guidelines released by ASIC aim to clarify lending obligations, with commissioner Sean Hughes attempting to balance flexibility between lenders and brokers.
ASIC, however, was quite clear about its position in the lending space, stating ‘the provision of credit is a decision for a lender and not a decision for ASIC,’ said Mr Hughes.
The updated guidelines ‘have been made to assist lenders make good lending decision’, according to the commissioner.
‘We are not adding new or additional requirements that do not already exist’.
While ASIC has stated its opposition to applying prescriptive minimum standards for loans, Mr Hughes says that credit risk remains in the hands of the banks.
Despite this, ASIC has provided 39 detailed examples for loaning scenarios in the changing business landscape, which even includes the hypothetical scenario where one individual is asked to suspend streaming services to be eligible for a loan.
The scenario sees “Leah” agree to suspend her monthly streaming services to apply for a $720 loan for her car registration.
According to ASIC, this is meant to encourage banks to go beyond the basic spending benchmark known as the Household Expenditure Measure.
Financial Rights Legal Centre CEO Karen Cox even goes as far to suggest that ‘the days of using the HEM benchmark as a substitute for genuine inquiry and communication with a potential borrower are over’, she said in an article by the Australian Financial Review.
Cox believes that ASIC has made it very clear that ‘current lending practices are not up to scratch, nor do they meet the community or regulator expectations’.