The government has made a regulation under the National Consumer Credit Protection Act extending the exemption from responsible lending rules that applies to small business lending.

National Consumer Credit Protection Amendment (Small Business Exemption No.2) Regulations 2021 was formalised by the Governor-General on November 11, but has effect from October 3 and applies until October 2024.

The small business responsible lending exemption was introduced in April last year as a COVID relief measures and was due to operate for a year. 

Since then the government has introduced a bill to remove responsible lending obligation from the NCCP Act, except where they apply to small amount credit contracts and consumer leases.

The Treasurer’s position is that the responsible lending obligations are administratively burdensome and time consuming, slowing the flow of credit to small business and households, and that APRA supervision provides sufficient safeguards.

The bill, National Consumer Credit Protection Amendment (Supporting Economic Recovery) 2020 was passed in the House of Representatives in March and introduced into the Senate. 

But there is considerable opposition to the bill and it has not yet been debated in the upper house.