ASIC Regulatory Guide 209 Credit Licensing: Responsible Lending Conduct (Australia) rg209-b-what-is-reasonable-red-flags: Scale the inquiries and verification to the risk of harm: more where the loan is large relative to income, the consumer is or may be vulnerable, the product is high cost or has priority access to income, the information is inconsistent, or the consumer has a history of repayment difficulty

What does rg209-b-what-is-reasonable-red-flags require?

The reasonableness of inquiries and verification steps depends on the potential impact on the consumer of getting it wrong, the complexity of the product, the capacity of the consumer to understand it, and the presence of indicators that more is needed. More is reasonable where the new obligations are large relative to income or the consumer appears to have little capacity, where the consumer is in a vulnerable position (including indicators of financial stress, low financial literacy or language barriers), for high-cost products (small amount credit contracts, consumer leases) where repayment amounts may be small but the cost is high and the licensee has priority access to income through direct debits or deductions, where information provided is inconsistent or implausible, and where the consumer's credit history shows repayment difficulty. Less may be reasonable where the credit is small relative to income and the product is simple. The guide gives tables of circumstances and the inquiries and verification steps ASIC considers reasonable in each, and worked examples.