While the Hayne royal commission did not recommend any changes to responsible lending laws, senior industry figures, including chief executive Shayne Elliott and Aussie Home Loans founder John Symond, have in the past year said there was uncertainty about how the laws work.
Australian Banking Association chief executive Anna Bligh said banks would study the guidance for any impact it would have on borrowing by customers.
“The industry is pleased to see ASIC has maintained a principles based approach to lending, which as an industry we have called for, and to ensure banks are able to fulfil their obligations without the process becoming too restrictive for customers,” Ms Bligh said.
Further adding to the public debate has been high profile court battle between ASIC and Westpac, which the bank won in August, with Federal Court judge Nye Perram saying consumers could cut back on luxuries such as Wagyu steak and shiraz to meet their loan repayments.
The ASIC document, which refers to Justice Perram’s judgement on several occasions, says that while consumers may be able to reduce their spending to afford a loan, there are also important costs people face and it would be unrealistic for banks to assume these can be cut. These include spending on housing, utilities, health care, education and child care.