Responsible Lending
Collection and Verification of client information
ESRA Star Pty Ltd will at all times adhere to NCCP responsible lending obligations which are founded from the following regulatory guide RG209. The objective of the responsible lending obligations is to ensure that the credit contract or lease is ‘not unsuitable’ for the consumer.
The National Credit Act defines situations where a contract will be unsuitable to include where:
the consumer will be unable to meet the repayments or can only comply with substantial hardship; or
the contract does not meet the consumer's requirements of objectives.
The responsible lending obligations also require that credit assistance is not provided to a consumer by:
suggesting they remain in an unsuitable credit contract
assisting them to enter into, or increase the limit on an unsuitable credit contract
suggest the consumer apply for, or remain in an unsuitable consumer lease
assisting the consumer to enter into a consumer lease that will be unsuitable for them
ESRA Star Pty Ltd breaks the process down into three steps:
Make reasonable inquiries about the consumer
Make a preliminary assessment whether the proposed credit contract is not unsuitable for the consumer
If requested, provide a written assessment that the credit contract is not unsuitable
This is primarily done through the collection and verification of all identification items, the verification of all financial statements and documents and an assessment is done to the validity of the loan.
In accordance with responsible lending obligations, and in determining whether a loan is not unsuitable for a consumer, an assessment must be undertaken of the consumer’s financial status, reasons and objectives for obtaining the loan.
There are two primary questions that must be kept in mind when undertaking a preliminary assessment and these must be answered in the affirmative prior to granting a loan:
Will the consumer be able to meet their financial obligations under the credit contract (i.e., have the capacity to repay the loan) without substantial hardship?
Does the credit contract meet the consumer’s requirements and objectives?
The first step is finding out what are the consumer's requirements and objectives in obtaining the loan.
The second step is obtaining from the consumer details of their income and their outgoings.
VERIFICATION
The information that is obtained from the consumer must by law be ‘verified’- reliance on the consumer’s word is never sufficient.
ESRA Star Pty Ltd will verify a consumer’s information in the following ways;
For clients reliant on Centrepay, a copy of their centrepay form from the myGov link
For all clients, copy of 90 days of Bank Statements via link
For PAYG employees: recent payroll receipts/payslips and confirmation of employment with the employer.
For self-employed consumers: recent income tax returns, a statement from their accountant and Business Activity Statements.
For all consumers: credit reports, information/reports from other lenders and bank account or credit records held by the credit provider.