Consultation is open on AFIA’s new Lending Code of Practice

The Australian Finance Industry Association (AFIA) has released a draft lending Code of Practice for consultation.

AFIA CEO Diana Tate has said “When we asked customers what they want most from their lender or finance provider in a code of practice, they said the most important thing was knowing if they got into financial trouble that they would be supported to get their finances back on track.

Customers also want confidence and clarity that their lender has clear disclosures, whether that is about the features or costs of a product, use of technology or their legal obligations when offering products and services. Customers also want to know that if things go wrong, there are clear complaint handling processes in place, and they can readily get the help and support they need.

The draft Code is about ensuring that customers have greater clarity and confidence.”

Whilst described by AFIA as Australia’s first ‘non-banking’ lending Code of Practice it is proposed to apply to all AFIA Members, including bank members. As many banks also subscribe to the ABA Banking Code of Practice, we expect any overlap and/or inconsistencies between the new AFIA Code and the BCoP to be addressed in the submissions.

For some non-bank lenders this may be the first voluntary industry code to potentially apply to them.

The AFIA Code proposes to include various general obligations together with specific obligations (set out in Schedules) for:

• Business Finance
• Consumer Finance
• Novated Leasing

The general obligations cover a broad range of matters from product related obligations (eg regular review of fees and charges disclosures), hardship/financial difficulty arrangements, scams, use of artificial intelligence, data protection, privacy and complaints procedures.

What does it mean for non-bank lenders?

Nothing right now but if AFIA do implement a new lending Code then non-bank lenders who are AFIA Members will need to be reviewing their policies, procedures and customer terms and conditions in light of the proposed Code obligations.

What do you have to do?

Submission period is open until 31 October 2024. More details can be found here.

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Disclaimer

This information is general in nature. It is intended to express the state of affairs as of the date of publication. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.