How Has The Banking Royal Commission Impacted Lending Practices?



If you plan to apply for a mortgage or business loan in Australia, the process might be more challenging than before.

This is because of the report released by the Banking Royal Commission.

The big banks in the country are tightening their financial lending practices because of the recommendations of the Royal Commission.

Many borrowers have been wondering how the findings of the commission will impact lending practices in Australia.

This article provides information on how the Banking Royal Commission will impact lending practices in Australia.

What Things Did The Banking Royal Commission Uncover?


The main role of the Banking Commission is to look into misconduct cases by the big banks and financial institutions in Australia.

Many wrongdoings of financial institutions have come into the light with the latest findings of the commission.

The commission has uncovered forged documents, mis-sold insurance, bribery, and other breaches of good lending practices.

The National Consumer Credit Protection Act (NCCP) implemented in 2009 was the last major reform to ethical standards in lending in Australia.

The recommendations of the Banking Royal Commission will be added to the NCCP.

What Changes Have Been Made So Far?

There are more stringent compliance checks already introduced into the application process of a loan. The application processes have lengthened as a result.

Borrowers will have to disclose more information than in the past with the recommendations of the commission.

The borrowing process is going to be tougher than in the past. Hence, consumers should be ready to face stiff interrogation by lending institutions when applying for a loan in the future.

Banks are building in “lending buffers” to ensure the borrower can repay the loan without defaulting on it.

Commercial banks in Australia have started asking for more bank statements to prove the income and repayment capability of the borrower when applying for personal loans.

A history of good financial conduct was enough to approve a personal loan in the past.

With the recommendations of the Banking Commission, lenders have got their act together.

What Impact Are These Changes Having?

The borrower may find it difficult to get approved for a personal loan just by having a good history of financial conduct. The process may be very black and white now.

The borrowing capacity will be brought down to reduce borrower defaults in the country.

Even though the big banks in Australia are tightening their lending processes, the smaller banks and lending institutions stand to gain from the opportunity.

They are increasing the number of lending options so that borrowers can choose the most suitable option.

The latest statistics show that borrowers are frequenting smaller banks and lending institutions for loans after the recommendations of the Banking Commission.

There are many things to consider when applying for a loan in the current environment.

  • Planning early is very important. Talk to the bank or lender as early as possible so that you are ready to answer all their questions and collect all the supporting documents on time.
  • Pre-approval is very important when applying for a loan. Getting pre-approved for a loan will increase lender confidence in you.

If you’re looking for some business or personal loan options from a trusted non-bank lender look no further than LoanONE.

Visit our application page and see if you qualify today.


Additional Reading:

The Difference Between Good and Bad Debt

4 Simple Ways To Repay A Personal Loan Sooner

How To Put Debt To Work For Your Business

Case For Borrowing Money Instead

8 Mistakes You Should Avoid When You Get A Small Business Loan