Banks will soon be able to rely on income and expenses information provided by borrowers, under the Federal Government’s changes to responsible lending guidelines. The move will speed up the credit approval process.

Treasurer Josh Frydenberg plans to abolish the responsible lending law that was imposed by the Rudd Labor government in 2009 following the American subprime loan crisis.

Mr Frydenberg says the most significant reforms to credit rules in a decade would increase the flow of credit to households and businesses, reduce red tape and strengthen protections for vulnerable consumers. “As Australia continues to recover from the pandemic, it is more important than ever that there are no unnecessary barriers to the flow of credit to households and small businesses,” he says. “By simplifying the application process for borrowers it will reduce barriers to switching between credit providers, encouraging consumers to seek a better deal.” Commonwealth Bank, ANZ, NAB and Westpac have all welcomed the changes.