The Council of Financial Regulators (CFR) – which is chaired by RBA governor Philip Lowe and includes APRA, ASIC and federal Treasury – met to discuss the tight credit conditions for small businesses and the associated reduced risk appetite from many lenders.
As a result, ASIC will soon officially confirm that the responsible lending laws don’t apply to small businesses.
In their post-meeting quarterly statement, the CFR stressed that the flow of credit is fundamentally important to the functioning of the Australian economy.
“(We) discussed the concern that lenders’ risk appetite for some types of lending may have swung too far towards caution,” the CFR said.
The CFR’s statement is in response to repeated complaints from bankers this year that tighter small business lending has been an unintended consequence of the Hayne royal commission.
During the meeting, CFR members discussed that in the coming weeks ASIC will release updated guidance on responsible lending provisions.
“It will confirm that responsible lending requirements do not apply to loans made predominantly for business purposes, regardless of the type of security offered for the loan,” said the CFR statement (and yes, they even bolded the ‘do not’ bit!).
The guidance will also assist lenders to better understand their obligations and reduce the risk of non-compliance.
That’s the easy bit – get in touch with us.
The lending appetite in the SME space is something we’re well across and are more than happy to bring you up to speed on.
So drop us a line and we’ll be happy to run you through some of your business’s financing options.
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