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Consumer Action Law Centre’s perspective is that the changes suggested appear commonsense, particularly because they describe a closer assessment of a person’s income and expenditure in providing consumer credit. On this basis, we do not oppose the amendment, but further clarification could be added to the guidance.

We anticipate that this clarification will lead to lenders giving closer  attention to a borrower’s financial position if they have a HECS or HELP debt. This could help some prospective borrowers – many of whom might be first home buyers – to secure a mortgage or refinance. For the vast majority of potential borrowers with insufficient income to meet the Compulsory Repayment Income Thresholds (CRIT), they would likely also not meet a suitability assessment under responsible lending obligations in the National Credit Code. In practice, we expect this will likely occur when
someone is the ‘second income’ on a mortgage application.

However, liability to pay a HECS or HELP debt is dynamic due to a person’s circumstances potentially changing at any time and therefore exceeding the CRIT. Changing employers can also mean that HECs and HELP payments are not withheld appropriately. Self-employed traders may not accurately anticipate their liability, and we understand that they are unable to make compulsory payments in advance of filing their tax return each year.

Read the full submission (PDF).