ANZ CEO Shayne Elliott warned that if banks become more conservative, the revised plan for responsible lending regulations may further hamper borrowers’ access to credit and undermine the economy.
In a panel discussion at the loan company Aussie Home Loans’ biennial national conference, Mr. Elliott said that if banks and other lenders become more cautious in lending decisions, the economy will be affected.
“The current risk is that we are going too far (on the issue of responsible lending),” he said at the Sydney event. “If we go too far, we will not be able to play our primary role in the economy and the system of providing liquidity, which allows the economy to actually come out and flow.
“When you have a reasonable credit channel, the economy will work… Most banks currently have risk aversion.”
John Symond, chairman of Aussie Home Loans, went one step further in his view, warning that more stringent regulations could hinder the recovery of the home real estate market.
“This is one of the biggest risks to regaining a foothold in the real estate market in the next 12 or 18 months,” he said, adding that they are worried about “over-regulation”.
“In many cases, the ultimate loser is someone who wants a home loan.”
The Australian Securities and Investments Commission (ASIC) is holding a public hearing on a revised plan for responsible loan regulations, seeking more insights from banks and other lenders about the changes.
Some of the big banks were named by the Hayne Royal Commission because they did not properly consider responsible loan laws to ensure that consumers can properly repay their loans.
However, major banks have questioned some aspects of the consulting documents issued by ASIC to update regulatory guidelines 209, which cover credit licensing and responsible lending practices.
ANZ’s comments to ASIC stated that the proposed changes would incur significant resource costs and would result in a review of 100 to 300 separate transactions in the borrower’s credit card statement during the first quarter.
“There are a lot of judgments that must be taken into account. I think history shows that banks and industries are doing quite well in this regard,” Mr. Elliott said today. “The reality is that in Australia, there are very few people who are in trouble because of their loans, and I understand that this situation is too much.”
Mr. Elliott also said that as regulatory changes, including responsible lending and capital requirements, and consumer expectations increase, banks will pay attention to improving their competitiveness.
“However, as a bank, our world is changing, really changing radically, and more than we are used to,” he added, adding that those who fear to solve these problems will not survive.
Mr. Symond said that the real estate market has already passed the early signs of the worst moment, saying that prices in many major markets are no longer falling.
He said that the price decline trend in most areas of the real estate market “has been gradual.”
Mr. Elliot pointed out that as the market recovers, the market will maintain steady growth.
“The economy is still growing… Our unemployment rate is very low, wage growth is a bit stubborn, and it doesn’t really happen, but it’s not the end of the world – we just have to go through some resets,” he said.
“The prospects for housing are quite positive. I don’t think this will go back to the market we have in the past five or seven years, but you know that conservative and steady growth.”
When asked about the owner of Aussie Home Loans, Commonwealth Bank’s withdrawal plan for mortgage lending brokerage, Symond said he was willing to participate in a deal to ensure that the group eventually entered the “right home.”
“I will make a big part? All of these are choices,” Mr. Symond said of the Federal Bank’s assurance that he would contact him before deciding to withdraw from the final structure of Aussie Home Loans.
In 2017, Mr. Symond sold his remaining 20% of Aussie Home Loans to the Commonwealth Bank.
More than 800 Australian brokers, franchisees, team members and representatives of the company’s business and industry partners attended the Aussie Home Loans conference.
