The Australian Banking Association is preparing to push back against ASIC's plan to make responsible lending guidelines more prescriptive, and will argue for the maintenance of the principles-based approach when the regulator holds public hearings on the issue over the next two weeks.ABA chief executive Anna Bligh said one of the big lessons of the Hayne royal commission was that financial institutions needed to take the individual needs of customers into account."If you want to do that you need flexibility in the guidance," she said.Speaking at a conference hosted by the Banking and Finance Oath and FINSIA in Sydney yesterday, Bligh said the imposition of strict serviceability rules could lead to perverse outcomes."A credit card customer might have had a high-rate card for 10 years, which they have managed with no problems. They might want to switch to a low-rate card but under a strict serviceability assessment they might get knocked back. That is not a good outcome."In February, ASIC issued a consultation paper, outlining proposed changes to its guidelines on responsible lending, Regulatory Guide 209. The paper detailed plans to tighten guidelines for responsible lending conduct.ASIC says it is concerned that some licensees are not taking sufficient steps to meet their obligations. And it wants to bring the guidelines up to date to take account of developments such as comprehensive credit reporting.The consultation paper says: "Although the law has not changed since 2010, ASIC considers it timely to review and update the guidance in light of its regulatory and enforcement work since 2011, changes in technology and the recent final report of the royal commission."One item up for consideration is whether to "more clearly identify the inquiries and steps that we think are important for licensees in complying with their responsible lending obligations."That would include guidance on the kinds of information that could be used for verification of the consumer's financial situation, including a list of forms of verification.RG 209 does not specify minimum standards. Obligations are scalable, with process left up to the licensee.ASIC is concerned that this approach may not be rigorous enough. It says: "We have observed since the start of the responsible lending regime instances where licensees have failed to take sufficient steps in order to comply with their obligations."The Australian Banking Association submission says: "The ABA supports the retention of a principles-based approach to responsible lending through the legislative provisions contained in the NCCP Act, as well as in relation to relevant regulatory guidance."A principles-based approach focuses regulated entities on developing their own approaches to achieve compliance with responsible lending obligations and shifts their regulatory focus from process to outcomes. We believe a prescriptive approach will not provide a net benefit to customers."The ABA says a more prescriptive approach may result in delays in obtaining credit, increases in the cost of credit and limit consumers' ability to change credit providers.ASIC is also planning to clarify its guidance on the use of benchmarks. It says they can be a useful tool to determine whether the