It’s clear to me: CBA CEO defends RG 209

Appearing before the House of Representatives standing committee on economics on Friday (4 September), CEO of the Commonwealth Bank of Australia (CBA) Matt Comyn was asked to weigh on calls from both the governor of the Reserve Bank of Australia (RBA) Philip Lowe and ANZ CEO Shayne Elliott for further clarification to responsible lending guidance.

Mr Comyn told committee members that he’s comfortable with existing interpretations of responsible lending (RG 209) issued by the Australian Securities and Investments Commission (ASIC) following “fulsome” consultation with stakeholders.

“It has been clarified,” he said.

“It is much more comprehensive and robust than it had been in the past.”

The major bank CEO dismissed suggestions that regulatory interpretations of the National Consumer Credit Protections Act (NCCP) have stifled the flow of credit, instead attributing disruptions to processing inefficiencies.

“We’ve invested tens of millions of dollars to make sure that we can turn around [our] lending decision times within a couple of days,” he said.

“It’s enabled us to grow above system. We lent more than $100 billion last financial year to housing.”

“I think it’s less about the supply of credit, it’s more about the process.”

He added: “The guidance, from our perspective, is clear. We understand the guidance. We certainly felt confident about the interpretation of the guidance.”

The CBA chief acknowledged that the credit assessment process has become more rigorous, with banks “far less able” to rely on income and expense information provided by customers, but said approval delays were a reflection of an individual institution’s processing capabilities.  

“[For] institutions that haven’t automated those processes, it takes them a significant amount of time, which is why some of the speeds of decision at some other institutions have blown out extensively, which is causing frustration across both customers, and particularly property developers,” he said.

However, despite Mr Comyn’s support for existing arrangements, ASIC recently revealed that in light of the Federal Court’s decision to dismiss its case against Westpac, it would review its updated regulatory guidance and consider the implications of the court’s decision on compliance practices.

ASIC issued its new guidance in December 2019, after holding two rounds of public consultation with industry stakeholders. 

The principles-based guidance was designed to provide lenders with greater clarity and flexibility amid uncertainty off the back of scrutiny from the banking royal commission. 

However, ASIC has stressed that prospective reforms of the NCCP Act to further clarify the enforcement of responsible lending obligations is “ultimately a matter for the federal government and Parliament”.

[Related: ANZ CEO laments responsible lending quagmire]