The National Consumer Credit Protection Act 2009 (NCCP Act) sets out your obligations when providing credit assistance to consumers. These obligations are designed to protect consumers and ensure ethical and professional standards in the finance industry.
Responsible lending requirements apply to all regulated consumer loans, including consumer asset finance and personal loans.
Use this guide to understand what responsible lending requires, how it applies to asset finance, and how to evidence compliance in Mercury Nexus and Financeable.
Your responsible lending obligations
To meet your responsible lending obligations, you must complete three key steps:
Make reasonable inquiries about the consumer’s financial situation, requirements and objectives
Take reasonable steps to verify the consumer’s financial situation
Make a preliminary assessment that the credit contract is not unsuitable for the consumer
These steps must be completed before suggesting or assisting with a regulated consumer credit contract.
What are reasonable inquiries?
The level and type of inquiries you make will vary depending on the client’s circumstances and their responses in the Needs Analysis or Fact Find.
If you uncover information that may affect suitability, you must make further inquiries before proceeding.
You must understand:
The consumer’s financial situation
The consumer’s requirements and objectives
Any risks or vulnerabilities
Whether the proposed credit contract meets their needs
If you do not fully understand the client’s circumstances, you cannot determine suitability.
What is credit assistance?
Under section 8 of the NCCP Act, you provide credit assistance if you:
a) suggest and/or assist the consumer apply for a particular credit contract with a particular credit provider; or
b) suggest and/or assist the consumer apply for an increase to the credit limit of a particular credit contract with a particular lender; or
c) suggest that the consumer remain in a particular credit contract with a particular credit provider; or
d) suggest and/or assist the consumer apply for a particular consumer lease with a particular lessor; or
e) suggest that the consumer remains in a particular consumer lease with a particular lessor.
If you are providing credit assistance, responsible lending obligations apply.
Who does the NCCP Act cover?
To determine whether NCCP applies, ask:
Who is the borrower?
What is the purpose of the loan?
If the borrower is a company or trust (other than a strata corporation), the loan is generally not regulated under the NCCP Act.
If the borrower is a natural person or strata corporation and the loan purpose is personal, domestic or household, the loan is regulated and NCCP obligations apply.
Consumer asset finance and personal loans are typically regulated where the borrower is an individual and the purpose is consumer-related.
Responsible lending disclosure obligations
Under Chapter 3 of the National Credit Act and the National Credit Regulations, you must provide specific disclosure documents to consumers.
These documents help consumers:
Understand the credit activities you provide
Understand their rights
Make informed decisions
Understand the contracts offered
You must ensure required disclosures are provided at the correct time.
Evidencing responsible lending in Mercury Nexus and Financeable
You must clearly document how you have met your responsible lending obligations.
The following documents and records help evidence compliance:
Disclosure Document | Responsible lending requirements |
Credit Guide | Provide when it becomes apparent you are likely to provide credit assistance. The Credit Guide includes the privacy consent. You must record when and how it was provided. |
Credit Quote | If you charge a fee (e.g. commitment fee, service fee or third-party fee), you must provide a written quote. Is NOT required for the origination fee. |
Needs analysis/Fact Find | Completed in Financeable, this evidences that you have made reasonable inquiries into the client’s requirements, objectives and financial situation. |
Preliminary assessment ** | The preliminary assessment demonstrates that the credit contract is not unsuitable. It must be completed in full, with information populated from Financeable. Is combined with the CPD and sent from Financeable. |
Credit Proposal Disclosure | This document outlines:
Is combined with the prelim assessment and sent from Financeable. |
Record keeping requirements
You are required to keep clear records of how you have acted when providing credit assistance.
ASIC expects records to clearly demonstrate how you have complied with your obligations.
Good record keeping may help you demonstrate compliance across multiple regulatory requirements.
You should retain records including:
A copy of the Credit Guide provided
The responsible lending assessment (or supporting documents used to prepare it)
Information provided to the lender
Outcomes of credit applications
Relevant conversations with the consumer
Evidence that you acted in the consumer’s best interests
The options considered and reasons for your recommendation
Any identified conflicts of interest and how they were managed
Records may include:
Emails
Diary notes
Text messages
System notes
Best practice tips
Review your notes before lodgement to ensure there is a clear communication timeline
Document conversations through file notes or confirmatory emails
Maintain consistent record keeping throughout the application process
Ensure your notes clearly support your recommendation
Failure to adequately document your responsible lending process may expose you to compliance risk.
Need help?
If you need help understanding or meeting your responsible lending obligations for consumer asset finance, contact your Partnership Manager or email [email protected].