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Living expenses & the lending landscape

September 3, 2019

The recent Financial Services Royal Commission has certainly shaken up the finance industry.

One of the key results is that loan providers (lenders) and loan facilitators (finance brokers) are now under increased scrutiny to ensure they meet responsible lending requirements under the National Consumer Credit Protection (NCCP) Act.

Under NCCP regulations, lenders and brokers must make reasonable enquiries, take reasonable steps and verify provided information to ensure they are not placing consumers into an “unsuitable” loan contract that may cause future financial hardship.

A key component of this assessment is living expenses.

Lenders typically work with Household Expenditure Measure (HEM) benchmarks to assess living expenses based on household income, locality (e.g. NSW v SA) and household type (single, couple, family with dependents).

Read more about the new lending environment, including some suggestions, on the William Buck website.