A “sensible, balanced approach to the application of responsible lending laws so that they do not unnecessarily constrain the free flow of credit,” is the latest plea from treasurer Josh Frydenberg at a property industry summit yesterday.
The government appears to intend to unsettle the supply side (banks) almost as much as those financial regulators that have been copping blame (for 18 months now) over what is – as the RBA governor Philip Lowe said the other day – a demand side curb on the flow of credit.
In a speech strangled by the Morrison’s government rhetoric of “a strong economy”, Frydenberg in the end aimed his main barb once more at ASIC and the Council of Financial Regulators.
“Should responsible lending laws be applied too stringently,” he argued, ‘they will also negatively impact consumer behaviour, with consumers more likely to remain with their current provider than go through the red tape burden associated with looking for alternatives.”
Pointing out that since 2009, ASIC has adopted a principles-based and scalable approach,” Frydenberg might as well have said straight out he demanded a politically-based approach.
Ten years of the policy enacted in the National Consumer Credit Protection Act, he said, “has allowed flexibility for lenders to appropriately take into account the facts and circumstances of each case and vary the degree of inquiry and verification depending on the customer risk involved.
“Common sense dictates that a sensible balance needs to be struck because an unduly restrictive application of these obligations can do as much harm as an overly lax one.
“Clearly, the risk that the provision of credit may cause substantial hardship to some should not result in a significantly reduced ability to access credit by the vast majority of consumers,” Frydenberg said.
Demand indicators are on the move in housing in Australia, a little more than most realise.