Why borrowing responsibly is 'more important than ever' now

The Federal Government is aiming to ease Australia's responsible lending laws, hoping it will help stimulate the economy. But with the onus of assessing the suitability to take on debt set to be placed back on a borrower, experts warn it is more important than ever to borrow responsibly.

The federal government is seeking to relax Australia's responsible lending laws. Source: Getty Images

Key points

• The Federal Government's proposal aims to make it easier for consumers and businesses to access credit.
• The proposal will shift the onus of assessing a borrower's suitability for a loan from the creditor to the borrower.
• Creditors will no longer face civil and criminal penalties for irresponsible lending.

In the wake of the COVID-19 pandemic, the Federal Government has introduced a bill to reform the responsible lending laws, to make it easier for consumers and businesses to access credit.

The proposal aims to make the loan application process for borrowers simpler, and the lenders’ responsibility to assess and verify a borrower’s ability to repay a loan will be reduced.