Responsible lending assessment checklist
Responsible lending obligations require licensees to assess whether a credit contract is "not unsuitable" for the consumer before entering the contract or increasing the limit. ASIC RG 209 provides detailed guidance. Failure to comply can lead to civil penalties, compensation orders, and licence conditions.
This is a 12-step checklist for conducting responsible lending assessments under the National Consumer Credit Protection Act 2009 (Cth). It covers the mandatory inquiries, verification, suitability assessment, and record-keeping obligations.
The checklist
Make reasonable inquiries — requirements
Inquire about the consumer's requirements and objectives for the credit, including the purpose, desired amount, and repayment preferences.
Make reasonable inquiries — financial situation
Inquire about the consumer's financial situation including income, existing debts, living expenses, and dependants.
Take reasonable steps to verify
Verify the consumer's financial situation using pay slips, bank statements, tax returns, or other reliable documentation.
Assess substantial hardship risk
Assess whether the consumer could meet repayments without substantial hardship, considering all verified income and expenses.
Assess contract suitability
Assess whether the credit contract meets the consumer's stated requirements and objectives. Flag any mismatches.
Apply the HEM or actual expenses
Apply the Household Expenditure Measure (HEM) benchmark or actual declared expenses — whichever is higher — in the serviceability calculation.
Account for interest rate buffers
Apply an appropriate interest rate buffer above the product rate to stress-test repayment capacity over the loan term.
Make preliminary assessment
Form a preliminary assessment and record the basis on which the credit contract is "not unsuitable" for the consumer.
Provide assessment to consumer if requested
Be prepared to provide the written assessment to the consumer on request within seven business days.
Document the final assessment
Finalise and record the assessment, documenting all inquiries made, information verified, and the conclusion reached.
Retain records for seven years
Store the assessment record, supporting verification documents, and file notes for at least seven years after the date of assessment.
Flag exceptions for escalation
Escalate any application where the consumer is on a Centrelink income, is a guarantor, or where debt consolidation is the primary purpose.
When this checklist applies
Use when a licensee or credit representative is assessing a consumer credit application, credit limit increase, or credit contract variation.
Common pitfalls
- Relying on consumer declarations alone without independent verification
- Using HEM as a floor without comparing to actual declared expenses
- Failing to inquire about the purpose of debt consolidation loans
- Not applying an adequate interest rate buffer in variable rate assessments
- Incomplete record-keeping that cannot reconstruct the assessment decision
Run this checklist on a real matter
Quillio can summarise ASIC RG 209 requirements, flag incomplete inquiry steps in a file, and generate assessment templates for common credit products.
General responsible lending guidance. Assessment obligations vary by product type and borrower circumstances — obtain specialist credit compliance advice.
Use this checklist on your matter.
Quillio can run this checklist on a specific NSW conveyancing matter — confirm each item, calculate adjustments, and generate the supporting documents. The free trial requires no sales call.
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