Wide Bay ordered to fix its responsible lending practices

Building society Wide Bay Australia has been ordered to improve its responsible lending practices, after the Australian Securities and Investments Commission found that it relied on information provided by a broker rather than doing its own checking.

ASIC said in a media release issued yesterday that Wide Bay would be updating its loan application forms to ensure they capture relevant information about a borrower's requirements and objectives.

Wide Bay has also undertaken to improve its processes where insufficient or inconsistent information is provided.

Wide Bay holds equity in FTS Securities, which operates a brokerage called FTS Finance Brokers.

ASIC said that in 2013 Wide Bay "restructured its customers' home loan initiated by FTS." Its view was that Wide Bay relied too heavily on limited information supplied by FTS.

Under the responsible lending rules of the National Consumer Credit Protection Act, credit providers must ensure that consumers are put into credit contracts that meet their requirements and objects. They must also ensure that borrowers can meet their repayment obligations without hardship.

ASIC has identified compliance with responsible lending obligations as a priority issue, especially where non-bank interest-only lending is involved.