In discussions with Commonwealth Treasurer Josh Frydenberg, banking industry stakeholders have reportedly highlighted gaps within existing responsible lending guidance, particularly in relation to the provision of small business credit.
According to Mr Frydenberg, some small business owners, particularly those using residential property as security, have been hindered in their pursuit for funding by interpretations of responsible lending laws, tightened in the aftermath of the banking royal commission.
"There's a real grey area as to what is a small business loan and a personal loan,” he said.
“Small businesses are exempt from responsible lending standards; however, they are being inadvertently caught in the tightening of those standards post the Hayne royal commission as many use the family home to secure finance.
"One of the concerns the government fully understands is the need for clarity about the indirect application of responsible lending laws to small business when the family home is used as security.''
The Treasurer encouraged lenders not to “feel nervous” about how they deal with consumers with small business credit needs.
Mr Frydenberg’s comments come amid the Australian Securities and Investments Commission’s (ASIC) work to revise its responsible lending guidance (RG209).
ASIC has concluded two phases of consultation with industry stakeholders as part of its work to revise RG 209.
The regulator is expected to publish its new guidance before the end of the calendar year.
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.