Low doc loans are still allowed under responsible lending guidelines but should not be given to employed people said the financial ombudsman last week.
The Financial Ombudsman Service issued a circular to members setting out its view of financial service providers’ responsible lending obligations under the National Consumer Credit Protection Act.
The Ombudsman said NCCP allowed for low-doc lending “if adequate inquiries are made and the statutory provisions regarding responsible lending are satisfied.”
“We recognise that there is a place for low-doc loans to cater for those self-employed clients who are unable to provide more traditional evidence of their income. However, in our view, low-doc loans should not, as a general rule, be granted to PAYG employees.”
The Financial Ombudsman Service issued a circular to members setting out its view of financial service providers’ responsible lending obligations under the National Consumer Credit Protection Act.
The Ombudsman said NCCP allowed for low-doc lending “if adequate inquiries are made and the statutory provisions regarding responsible lending are satisfied.”
“We recognise that there is a place for low-doc loans to cater for those self-employed clients who are unable to provide more traditional evidence of their income. However, in our view, low-doc loans should not, as a general rule, be granted to PAYG employees.”
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