Some media outlets screamed ‘it will cause another financial meltdown akin to the GFC’ following recent Federal Government announcements to curb responsible lending laws.
I have been asked by many clients for my thoughts on this, from my position as a professional accredited credit advisor acting in-between the bank and customer in support of the customer.
The truth is we need responsible lending rules and legislation. There are many vulnerable members of society who will take credit offered to them with insufficient consideration of the consequences, or of their ability to repay the debt.
But is the existing legislation pushing too far?
I liken this to the Victorian Governments response to the road toll. There was a time over 1,000 lives were lost on Victorian roads in a 12 month period. Unacceptable. Rules and regulations were introduced specifically to save lives, such as compulsory seat belt legislation, and speed limit implementation and enforcement. At the time there was a furore over civil rights, today few would argue.
The success of that program is undeniable!
Yet final responsibility for safe driving remains in the hands on the steering wheel.
Over 200 lives were lost on Victorian roads last year. So what next? Do we decrease the maximum speed limit permitted on all Victorian roads to 40 km/h? Do we cut down every tree on the side of a road? It would decrease the road toll further!
Most would view the cost as greater than the gain.
And so it needs to be with responsible lending legislation. We need rules and regulations. But not a 40 km/h speed limit and no trees. Which is what we have at the moment. Some return of responsibility to the borrower is required, we need to continue to search for the correct balance.
The road toll will never be zero. Loan defaults will never be zero. Legislation must be enacted and enforced to protect the vulnerable, however each individual needs to continue to take responsibility for their own actions.
You are the master of your destiny. Take responsibility, seek education, seek advice. I implore all readers: Keep your hands on the wheel and keep your eyes on the road. In your car, in your credit, and in your life.
Take care and keep safe,
Daryl Borden