The government says the overhaulwill make it faster for consumers to access credit,while vowing vulnerable borrowers will still be protected through other regulations on banks and redress schemes.
In submissions published on Tuesday,Commonwealth Bank,Westpac and National Australia Bank backed the changes,saying they would remove barriers to credit.
NAB said it would continue to assess if customers could repay their loans without falling into hardship,by assessing their income,expenses,and total debts. But it argued lending was being slowed down by requirements for banks to collect too much information about potential customers’ living expenses.
“The current process requires customers to provide significant details about minor,discretionary and retrospective spending on items such as television subscriptions and food deliveries,” NAB said in a submission to a Senate inquiry.
“This doesn’t account for the changes customers often make to discretionary spending once they have made new loan commitments.”
CBA also said banks were currently asking for information that customers found “burdensome” to provide,and the data did not provide a useful guide on a customer’s ability to repay a loan.
Australian Banking Association chief executive Anna Bligh said applying for a loan could be “trying” for customers. “They are required to produce months of spending information across the spectrum of their lives;from the most regular fixed expenses all the way through to discretionary spending on hairdressers,travel,takeaway food and entertainment,” Ms Bligh said.