ASIC Regulatory Guide 209 Credit Licensing: Responsible Lending Conduct (Australia) rg209-b-verification-benchmarks-hem: Verify the financial situation with reasonable steps (payslips, bank statements, transaction data, credit reports), and use expense benchmarks such as the Household Expenditure Measure only as a check on declared expenses, never as a substitute for inquiry

What does rg209-b-verification-benchmarks-hem require?

Verification means taking reasonable steps to confirm the consumer's financial situation from sources independent of the consumer's say-so: payslips and employer confirmation, tax returns and business activity statements for self-employed consumers, bank and transaction statements, credit reports and comprehensive credit reporting data, and increasingly open banking and digital data capture, with the steps scaling as in the earlier sections. Income and expense benchmarks do not of themselves provide information about the individual consumer and so do not satisfy the inquiry requirement; they may be used as a plausibility check on declared expenses, and where declared expenses are below the benchmark the licensee should make further inquiries or verify rather than simply substitute the benchmark. The Household Expenditure Measure is the benchmark most used; ASIC notes what it includes and excludes (it does not include rent or mortgage repayments, consumer credit repayments, private school fees, childcare, insurance and some other items), that it measures what households actually spend at the median level of discretionary spending, and that a consumer whose spending equals the benchmark may still be unable to afford the loan; licensees that use it should use the version matched to the consumer's location, income and household, apply it only in the way described, and keep their approach under review against outcomes.