subscribe to our newsletter

CBA CEO commits to reducing ‘reliance’ on HEM

Commonwealth Bank CEO Matt Comyn has been questioned by the royal commission over the bank’s perceived “reliance”’ on the HEM.

Giving evidence to the financial services royal commission in its seventh round of hearings, CBA CEO Matt Comyn has said that the bank is committed to reducing its reliance on the use of the Household Expenditure Measure (HEM) for home loan applications.

Counsel assisting the commission Rowena Orr QC made reference to a report from the Australian Prudential Regulation Authority (APRA), noting that CBA’s reliance on the HEM was the “highest of all of its peers”.

According to the APRA report, as of October 2017, CBA was defaulting to the HEM for 75 per cent of its home loan applications.

However, Mr Comyn has committed to reducing the number of loans assessed through the use of the HEM by approximately 20 per cent, adding that the bank has introduced broader living expense fields in its home loan assessments.


“We’ve increased the number of expense fields to 11,” the CEO said.

“At each of those individual expense fields, there are both prompts to the lender which ultimately is meaning that we’re doing a better job of discovering what a customer’s declared living expenses figure actually is, and, therefore, HEM as the prudent floor is being relied on less and less.”

He continued: “I would certainly like to see it in the 50s very soon. I’m very confident it’s going to be at that level very soon.”

Ms Orr asked: “So that’s, in your view, an acceptable level of reliance on [the] HEM as a default measure, 40 to 50 per cent of your loans?”

Mr Comyn replied: “Somewhere in that order, yes.”


Despite committing to reducing CBA’s reliance on the HEM, the bank submitted in its response to the interim report of the financial services royal commission that the use of the HEM was “legal and appropriate”.

NAB and Westpac also backed the use of the HEM as a benchmark for validating a borrower’s living expenses.

Commissioner Kenneth Hayne has questioned whether the use of the HEM fulfilled responsible lending obligations under the National Consumer Credit Protection Act (NCCP), suggesting that “it does not constitute any verification of a borrower’s expenditure”.

[Related: Major banks back HEM despite RC concerns]

CBA CEO commits to reducing ‘reliance’ on HEM

Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

Banks are too reliant on regulatory oversight to do what is right for borrowers, the big four boss has said. ...

There has been a surge in Melbourne residents migrating to regional Victoria, and an uplift in new housing approvals in Geelong, new researc...

ASIC reported a significant increase in the number of ACL and AFSL applications it received in the past year due to licensing reforms, inclu...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.