NCCP

Responsible lending

What is NCCP?

The National Consumer Credit Protection (NCCP) Act is one of many developments in Australia's credit risk landscape changing the way credit providers and credit assistance providers conduct their business.

 

The National Consumer Credit Protection Act is a recent Commonwealth law that includes the old state based Uniform Credit Code. It enforces reponsible lending obligations on all licensees. To find out more about the National Consumer Credit Protection obligations visit ASIC.

 

Implementing responsible lending requirements

Veda has developed a five step plan to help businesses meet their obligations under the legislation.

1. Have a documented and auditable process in place: It's not enough to simply be registered - businesses are responsible for ongoing compliance. Read the regulatory guides on the ASIC website.
2. Understand your current lending procedures and make the appropriate adjustments: Make sure you understand your business' current lending processes. These processes have potentially been in place for years and need to be re-examined to get them compliance ready.
3. Understand your customers' requirements: Credit providers and credit assistance providers now have increased responsibility to enquire about a consumer's financial circumstances and objectives. This includes assessing a consumer's current financial lending obligations, and projected capacity to repay. Checking a consumer's credit file is a fundamental tool in ensuring best practice consumer credit lending and particularly powerful when used as part of a decision and assessment process.
4. Set up good practice responsible lending documented processes. Email Veda for information on solutions to support good practice credit risk management.
5. Train and monitor all relevant staff: Responsibility for this legislation does not stop with the risk manager. All staff should be briefed on the changes and understand their role in satisfying compliance.

 

Making the best use of existing data

New responsible lending laws require you to make reasonable inquiries* about applicants using robust credit risk management processes and the best available information. The key is to distinguish which applications need further scrutiny to comply with the new law and which do not.

 

Veda's credit reports are a valuable tool to help you distinguish applications needing further scrutiny. Existing Veda credit reports contain unique and valuable information to identify higher risk applications.

 

Current Veda credit reports are one of the only data tools available that can help you identify undisclosed liabilities in order to verify financial circumstances* as required under the National Consumer Credit Protection Act.

 

Veda holds the largest consumer credit database in Australia with data on 16.5 million credit active individuals. The breadth and depth of this coverage provides a comprehensive and reliable view of consumer credit applications.

 

* ASIC Regulatory Guide 209: Credit Licensing Responsible Lending Conduct (February 2010)