Home lending in Australia is one of the more heavily regulated parts of the economy. Knowing which rules apply, and who to go to when something goes wrong, is genuinely useful if you ever need it.
What laws cover home loans?
The main one is the National Consumer Credit Protection Act, usually shortened to the NCCP. It covers credit provided to individuals for personal, domestic or household purposes, and for buying, renovating or improving residential property as an investment. It does not cover lending for business or commercial purposes.
Anyone who provides or arranges consumer credit needs an Australian Credit Licence, or must operate as a credit representative of someone who holds one. That includes lenders and mortgage brokers.
The Privacy Act governs how your personal and credit information is collected, stored and shared, including what credit reporting bodies are allowed to hold about you and for how long.
Who regulates lenders and brokers?
- ASIC, the Australian Securities and Investments Commission, regulates credit licensees. It issues and can cancel credit licences, sets the conduct standards and takes enforcement action.
- APRA, the Australian Prudential Regulation Authority, regulates authorised deposit taking institutions, meaning banks, credit unions and building societies. APRA sets rules on capital and lending standards, such as the buffer lenders must use when assessing whether you can afford a loan.
- The RBA sets the cash rate, which influences interest rates but does not regulate individual lenders.
Non-bank lenders are not regulated by APRA, because they do not take deposits. They are still credit licensees regulated by ASIC under the same consumer credit laws. More on how non-bank lenders work.
What rights do borrowers have?
Responsible lending. Lenders and brokers must make reasonable enquiries into your circumstances and verify what you tell them, and must not put you into a loan that is unsuitable or that you could only repay with substantial hardship.
Best interests duty. Since 2021, mortgage brokers have a legal duty to act in your best interests, and to prioritise your interests over their own where there is a conflict. This obligation applies to brokers specifically. Staff working for a single lender are not held to it, which is a real difference worth understanding when you decide who to deal with.
Clear documentation. You are entitled to a credit contract setting out the rate, fees, term and repayments, plus a credit guide from any licensee you deal with explaining who they are and how to complain.
Hardship. If you cannot meet your repayments, now or in the near future, you can give your lender a hardship notice. The lender must consider it and respond within set timeframes. Options can include pausing repayments, extending the term or reducing payments for a period. What to do if you are struggling with repayments.
How do I complain if something goes wrong?
There are two steps, and they happen in order.
First, complain to the business directly. Every credit licensee must have an internal dispute resolution process and must respond within a set timeframe.
If you are not satisfied, go to AFCA. The Australian Financial Complaints Authority is the external dispute resolution scheme for financial services in Australia. It is free for consumers, and its determinations are binding on the financial firm if you accept them. Every credit licensee is required to be a member.
AFCA has been the single scheme since 1 November 2018, when it replaced the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal. If you come across older material pointing you to FOS or COSL, it is out of date.
How do I check someone is licensed?
ASIC keeps a public register of credit licensees and credit representatives. Any broker or lender should tell you their licence number without hesitation, and it should appear on their credit guide and website. If you cannot find it, that is worth asking about.
Well Money operates under Australian Credit Licence 430334.