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AFCA’s Responsible Lending Approach consultation

Deloitte Submission

In July 2023 AFCA began consultations on a draft Responsible Lending Approach. This is the proposed approach to responsible lending complaints with the objective to provide greater clarity around what to expect during the resolution process, greater transparency about the way investigations and decisions are made, and to ensure the ombudsman delivers consistency in outcomes. 

AFCA sought feedback on their proposed approach which includes:

  • The scope of the approach
  • How responsible lending complaints will be assessed
  • How unsuitable loans will be remediated

We believe that this consultation process is an important opportunity to provide feedback on AFCA’s proposed approach to ensure that it is fair and transparent for all parties. We are committed to supporting financial firms in their review process and believe timely, accurate, consistent and fair outcomes can only be achieved across the industry if detailed and transparent guidance is provided by AFCA in their proposed approach. This is why we have submitted a detailed response to the consultation paper.

The Deloitte feedback has concentrated on the following key areas:

  • Ensure the proposed approach is consistent with existing regulatory guides and that the proposed approach is consistent with the guides and standards that existed at the time of the lend. It is important that AFCA does not hold lenders to a standard that was not in place at the time the loan was made.
  • Provide further guidance and clarity on subjective measures. This will enable lenders to enhance their internal dispute resolution process and lead to faster resolution times for impacted customers by limiting the number of escalations.
  • Include principles for the compensation approach and more examples on loss determinations. This will help to ensure that compensation is fair and equitable for all parties.
  • Reconsider the proposed approach on how adjusted debt should be repaid. Particularly when the customer retains the property purchased with an unsuitable loan.

Should you wish to further discuss our response or the draft standard, please get in contact with our team - Daniel Nott Partner, Audit and Assurance Treasury and Capital Markets and Indhika Murugathas  Senior Manager, Audit and Assurance


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