AFIA launches first non-bank lending code of practice

The Australian Finance Industry Association (AFIA) has unveiled the country’s first-ever non-bank lending Code of Practice, marking a significant step forward in setting industry standards for consumer lending, novated leasing, and business finance. The draft Code, released for consultation, aims to establish new benchmarks for non-bank lenders and finance providers, enhancing trust and protection for consumers.

“With cost-of-living pressures affecting many Australians, it is crucial that everyone has choice and is able to access the finance products and services they need in a way that works for them. Australians deserve to have confidence that all lenders or finance providers are adhering to the highest industry standards set by the new Code.

“AFIA members are committed to delivering consumer protections, while ensuring we continue to create more efficient, innovative and competitive lending products and services that benefit all Australians in the new economy,” Tate said.

Recent consumer research conducted by Pyxis Polling showed that 81% of Australians expect the finance industry to implement a Code of Practice in addition to legal obligations. The study also found that firms not voluntarily adhering to such a Code risk losing customer trust.

The draft Code sets forth several key commitments, including clear communication around financial products, robust support for customers experiencing financial hardship, and secure handling of personal information.

Tate said, “When we asked customers what they want most from their lender or finance provider in a code of practice, they said the most important thing was knowing if they got into financial trouble that they would be supported to get their finances back on track.

“Customers also want confidence and clarity that their lender has clear disclosures, whether that is about the features or costs of a product, use of technology or their legal obligations when offering products and services. Customers also want to know that if things go wrong, there are clear complaint handling processes in place, and they can readily get the help and support they need.

“The draft Code is about ensuring that customers have greater clarity and confidence. AFIA is working with our members through the consultation process to ensure we have a Code that also supports industry. “

AFIA emphasized the importance of self-regulatory practices as part of Australia’s broader co-regulatory framework, helping members meet both legal and community standards. Tate noted that the draft Code seeks to balance heightened industry standards with ensuring that finance remains accessible to consumers and businesses, particularly amid evolving economic conditions.

The consultation process, which runs until October 31, 2024, invites input from industry members, consumer groups, and stakeholders to refine the Code. It also includes updates to several existing industry Codes, such as AFIA’s Buy Now, Pay Later (BNPL) Code, aligning it with the latest regulatory recommendations, as well as revisions to the Car Rental Code of Practice.