ASIC Regulatory Guide 209 Credit Licensing: Responsible Lending Conduct (Australia) rg209-c-unsuitability-test-likely: Assess whether the product is unsuitable at the time of the assessment on what is likely, that is probable, and understand the difference between a broker's preliminary assessment and a lender's final assessment

What does rg209-c-unsuitability-test-likely require?

The licensee must assess whether the credit product or limit increase is unsuitable, which it is if the consumer probably cannot meet the financial obligations, or can meet them only with substantial hardship, or if the product will not meet their requirements and objectives, or in the prescribed circumstances. The assessment is a point-in-time judgment of a likely future position based on what is known and reasonably foreseeable; ASIC reads likely in its ordinary sense of probable rather than as a remote possibility, and licensees should not rely on information they have reason to believe is unreliable. A broker's preliminary assessment is as rigorous as a lender's but may reasonably reach a different conclusion because the broker and the lender hold different information; neither can treat the other's assessment as its own.