Australia's financial regulators said on Friday the government's proposal to ease lending requirements for banks would support the supply of credit.
Aiming to help the economy recover from the coronavirus pandemic, the government said last week it planned to remove so-called responsible lending laws which were introduced in the wake of the global financial crisis to protect consumers against being sold inappropriate credit.
The move, which has been criticised by consumer groups, came as a surprise after a government-mandated inquiry that concluded in February last year excoriated Australia's financial sector for misconduct, including the approval of loans to people which could not repay.
Regulators agreed with government that the change would support the supply of credit, Australia's Council of Financial Regulators said in a statement, adding that it had been discussed at their quarterly meeting.
They added that prudent lending by banks would still be required by Australian Prudential Regulation Authority (APRA), whose role is to oversee the stability of the financial system.
APRA said in a statement it would consider reviewing and possibly updating some of its standards once the new laws are passed.
(Reporting by Renju Jose and Paulina Duran; Editing by Edwina Gibbs)
