Mr Argus,one of the most senior figures in corporate Australia and also a former BHP chairman,said thorough credit checks were the backbone of traditional banking as debt recovery was a costly exercise."The basic principles of lending money have always been the same. One is the integrity of the customer,two is the capacity of the customer to repay the loan,"Mr Argus said."If they can’t repay the loan,you run into issues."
But he said said low cost,startup finance providers with sales-driven cultures could cause problems."If people are being incentivised to write more loans without going through the proper credit assessment,yes you’re going to run into trouble."
Consumer rights groups criticised the government's move,as federal Labor and the Greens signalled a potential fight to repeal the laws in Parliament.
In a strongly worded statement,the heads of Choice,the Consumer Action Law Centre,Financial Counselling Australia and the Financial Rights Legal Centre hit out at the proposals.
"Government’s proposed reforms will remove bank responsibility to customers,opening up new opportunities for banks to aggressively sell debt,"the groups said.
The four consumer groups were key advisers to the Hayne banking royal commission,and provided a large number of the case studies examined during the year-long inquiry into misconduct in banking and financial services.
The Hayne commission did not recommend any changes to responsible lending laws in its final report,finding the provisions in the credit laws and the banking code of conduct requiring banks to lend responsibly were satisfactory. Mr Hayne declined to comment on the proposed changes when contacted byThe Age andThe Sydney Morning Herald on Friday.