Ombudsman vows to get tough on lenders

The Credit Ombudsman Service has issued a position statement on responsible lending, claiming it will “get tough” on lenders. Ombudsman Raj Venga said the guide would prove useful to COSL members and consumers.

Under its position statement, COSL has claimed the power to take action on non-compliant members when consumer complaints are brought against them. The EDR said it could require its members to waive or refund fees of lenders and brokers, vary repayment terms or even entirely release borrowers from credit contracts it deems unsuitable.

“These are not mutually exclusive remedies and COSL may combine them so as to produce an outcome having regard to “fairness in all the circumstances.” For example, upon a finding of irresponsible lending, COSL may determine that the consumer repay the principal amount owing under the credit contract by regular payments over time, in such amounts which would not cause hardship and that the credit provider waive any fees and charges in part or, if fairness requires, in whole. If a credit assistance provider had assisted the consumer into the unsuitable contract and the amount financed included any fee paid to the credit assistance provider, then the amount to be repaid, could be reduced by the amount of that fee in part or in whole,” the guide said.

Source: Australian Broker News