Banks Endorse Continued Regime of Promoting Mortgage Stress on Consumers

It’s Too Hard

The big four banks have attacked ASIC’s responsible lending proposals as impractical, anti-competitive and potentially damaging to the economy in a series of defensive submissions. (AFR 2/7/19). At the centre of this is what the banks consider the impractical recommendation that the HEM (House Expenditure Method used to estimate expenditure in a loan application) be scrapped and the banks review actual individual customers household expenditure. This is considered too labour intensive and time consuming to be of practical application, so the banks say.

So, what is this Fintech you speak of?

One only has to do a cursory search to find a myriad of consumer apps that can analyse household expenditure with little more than a click, swipe or drag. Surely with a burgeoning Fintech sector and advances in AI we have solved the Dickensian world of manual loan applications long ago?

All this protestation whilst the “Open Banking” regime began on the 1st July. Open Banking enables the consumer to direct that they, or their bank, be provided with their transaction data in a secure environment. This data can than be used to offer  banking products that are better suited to their needs a.k.a. “loans they can afford through the economic cycle”.

So why are banks whinging about the time and effort to analysis lenders transaction data to verify actual household expenditure as per the ASIC recommendation. Is it just because is wasn’t in a Royal Commission recommendation? Is this retribution?

Can’t Trust You as Far as I Can Throw You!

All banks have stated that in the wake of the Royal Commission rebuilding trust is a major strategic priority. This stance makes a complete mockery of that proposition. It benefits shareholder not consumers. You would think that the banks would be jumping at a chance to help a potential customer understand that their spending habits and household situation mean that a small change in either their income or bank interest rates could mean significant financial hardship?

“Your organisation is perfectly designed for the results that you achieve” – W.Edwards Demming