Aussie Home Loans founder John Symond has said over-regulation in the wake of the royal commission was hurting consumers.
Frydenberg has said he would instruct ASIC to waive the responsible lending standards for small business to ease the credit squeeze on SMEs.
Some senior bank executives have said ASIC’s focus on the laws has made front-line staff more cautious.
The laws are relatively straightforward, requiring lenders to ensure that their loans are “not unsuitable” for the customer.
ASIC says this means gathering and taking reasonable steps to verify information about a customer’s financial situation and making reasonable inquiries about a consumer’s requirements and objectives when seeking a loan.
It is the question of what constitutes “reasonable inquiries” that is generating uncertainty. In effect, by prescribing what constitutes ”reasonable inquiries,” ASIC is trying to turn laws that are statements of principle – ”fuzzy” law – into black-letter law.
Hughes disputed claims that the laws and ASIC’s guidance had impacted approval times or rejection rates for loan approvals, citing information ASIC had sought and received from the Australian Banking Association and the major banks.
He said ASIC didn’t accept that a decision to update its guidance on the laws – ASIC is nearing the…