CHAPTER 17: A Responsible Approach to Lending

## CHAPTER 17: A Responsible Approach to Lending

### Lending to Individuals and Small Businesses

49. When considering a new loan or an increase in a loan limit, we will act with the diligence and prudence expected of a banker.

50. For individual customers who are not businesses, we will comply with legal requirements.

51. For small businesses, we will assess your ability to repay the loan by considering relevant circumstances known to us regarding:

a) your financial situation; or

b) your account behavior.

When reasonable, we may rely on third-party resources connected to you, such as related entities (including directors, shareholders, trustees, beneficiaries, or related corporations), partners, joint venturers, or guarantors.

52. We are also obligated to ensure any guarantor of the loan is considered in assessing the borrower's repayment ability.

### Lending to Co-Borrowers

53. If you're an individual applying for a loan or an increase, paragraphs 54 to 56 apply.

54. If the information provided indicates you won't receive substantial benefit from the loan, we won't approve you as a co-borrower unless:

a) we've ensured you understand the risks and the difference between being a co-borrower and a guarantor;

b) we've considered your reasons for wanting to be a co-borrower;

c) we're satisfied you're not experiencing financial abuse.

55. Substantial benefit includes:

a) acquiring a proportionate legal or equitable interest in assets bought with the loan; or

b) using a reasonable portion of the loan to repay your debts.

56. You can end your liability by submitting a written request if:

a) credit hasn't been provided or relied upon by any co-borrower; or

b) for future advances, if we can terminate any obligation to extend further credit to other co-borrowers under the same loan.

57. Paragraphs 53 to 56 do not apply to trustees, companies, directors of co-borrower companies, or partners in a partnership or joint venture.

### Suitability Assessment for a Loan

58. If your loan is approved and regulated under the National Consumer Credit Protection Act 2009, we'll inform you that you can obtain our assessment of its suitability.

59. If you're a guarantor, you can request a copy free of charge.

### Assessing Credit Card Repayment Ability

60. When applying for a new consumer credit card or limit increase, we'll assess your ability to repay the credit card limit within three years.

60A. If the National Credit Code applies to the new loan or increase, we'll consider your ability to repay existing credit card limits within three years.

### Setting a Credit Card Limit

61. You can specify your preferred credit card limit, and we won't exceed it, though transactions may still cause you to exceed your limit.

## CHAPTER 18: Our Approach to Selling Consumer Credit Insurance (CCI)

### Selling CCI for Credit Cards and Loans

62. If we offer CCI, we'll provide clear information to help you make an informed decision, including:

a) the CCI cost and any interest on the premium;

b) the insurance duration;

c) monetary limits on key benefits;

d) the insurance end date if different from the credit product's end date.

63. We'll ensure we have your express consent before acquiring the product.

### Separation of CCI Application Process

64. We'll mention CCI availability only after you've completed the digital application for a credit card or loan.

65. Whether you purchase CCI or not won't affect your credit card or loan approval.

66. We'll use clear disclosure for CCI on credit cards and loans so customers can better understand this insurance type, including:

a) Filtering questions to highlight key policy exclusions;

b) Disclosing policy limits;

c) Disclosing any incentives and their effects;

d) Informing you of the total insurance cost before purchase;

e) Explaining premium payment methods;

f) For ongoing premiums calculated as a percentage or cost per dollar of debt, explaining the cost and calculation method.

### Deferred Sales Period for CCI

67. For CCI offered through branches or over the phone, we won't offer it until at least four days after your credit product application, known as a 'deferred sales period.'

68. We can provide factual CCI information during this period.

## CHAPTER 19: Lenders Mortgage Insurance

### Lenders Mortgage Insurance Contracts

69. We may require you to pay for lenders mortgage insurance with a loan. If so, we'll provide a fact sheet with key policy features.

70. We won't charge more for lenders mortgage insurance than the actual cost, and we won't receive a commission on the policy.

71. Depending on the policy terms, if your loan is repaid or refinanced early, you may be entitled to a partial refund, which we'll explain in the fact sheet.