ABSTRACT
In the wake of concerns regarding over-indebtedness and, more recently, the global financial crisis, ‘responsible lending’ regulations or directives have been made or enacted in Australia, South Africa, the US and Europe. These regulatory regimes have varied in terms of the extent of their concern with ‘responsible lending’ or ‘responsible borrowing’ and their reliance on tests, such as ‘suitability’, ‘creditworthiness’ or ‘recklessness’. Some appear to have been motivated by consumer protection – that is, the protection of consumers transacting in financial markets – while others seem to be more about protecting financial markets from the irresponsible actions of consumers. In every case, responsible lending regimes have at their base a requirement that lenders or potential borrowers assess the borrowers’ capacities to repay the loans in question before lending or borrowing. Some regimes impose penalties for lenders’ failures to make those assessments, while others do not, relying on borrowers to commence proceedings to complain about the lender’s conduct.
