27 June 2019

Banks to face public hearings over responsible lending

This article was written by Alexander Morris and Jaslyn Ng.

ASIC chairman James Shipton has indicated that the regulator intends to have public hearings about responsible lending practices.  In a keynote address to the Committee for Economic Development of Australia today, Mr Shipton stated that ASIC was updating its responsible lending guidance, and as part of its consultation, public hearings would be held to “robustly test some of the issues and views that have been raised in submissions”. This follows ASIC’s consultation paper on updating its guidance on responsible lending that was issued in mid-February 2019.

ASIC’s power to hold hearings arises primarily out Pt 3 Div 6 of the Australian Securities and Investments Commission Act 2001 (Cth).  This legislation permits the regulator to hold hearings for the purposes of the performance or exercise of any of its functions and powers under the corporations legislation.  Pt 6-5 Div 2 of the National Consumer Credit Protection Act 2009 (Cth) contains a parallel provision in respect of the performance or exercise of any of ASIC’s functions and powers under credit legislation.

While ASIC has discretion as to whether hearings take place privately or publicly, the regulator is required to have regard to whether it is in the public interest for a hearing to take place in public.  Under these provisions, ASIC also has power to summon witnesses and require the production of documents for the purposes of a public hearing.  It may also refer to a court any questions of law arising at a hearing.

ASIC’s hearings power has been little used to date. However, it appears from the regulator’s latest position that it intends to utilise these public hearings as an aspect of its renewed approach to enforcement in the wake of the Hayne Royal Commission, and in light of its various new penalties and legislative powers.

Share on LinkedIn Share on Facebook Share on Twitter
    You might also be interested in

    A recent decision of the Federal Court has confirmed that a secured creditor who consents to employee creditors being paid out of the charged asset pool is entitled to be subrogated to the priority...

    20 October 2020

    Over the last decade or so there has been dramatic growth in PRC real estate developments in the larger cities, and much of that has been financed by debt.

    20 October 2020

    ASIC released a consultation paper in June 2019 regarding the use of stub equity in public to private transactions, essentially looking to clamp down on the types of bid vehicles that could be used...

    19 October 2020

    The recent decision in Resolute Mining Limited v Commissioner of State Revenue is an important reminder of the need to carefully consider the duty implications of any contingent consideration for a...

    19 October 2020

    This site uses cookies to enhance your experience and to help us improve the site. Please see our Privacy Policy for further information. If you continue without changing your settings, we will assume that you are happy to receive these cookies. You can change your cookie settings at any time.

    For more information on which cookies we use then please refer to our Cookie Policy.