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Take it to the limit

From 2001 until March 2018 Jenny used her revolving credit account, with a limit of $3,000, without incident. In March 2018 Jenny contacted the lender to say that she could not afford the $55 weekly repayments because her husband had left her, and her financial circumstances had changed. The lender agreed to reduce the payments to $40 a week.

Following the relationship breakdown Jenny went to a financial mentor for help. The financial mentor reviewed Jenny’s financial situation and contacted the lender saying that Jenny was struggling financially. The financial mentor was exploring refinancing Jenny’s debt elsewhere and asked the lender to reduce her payments to $20 a week. The lender said they could only reduce the payments to $20 temporarily and after three weeks the payments reverted to $40 a week.

The financial mentor was unable to refinance Jenny’s loan and, in early September, Jenny contacted the lender asking to permanently reduce the payments to $20 a week. The lender did not agree.

About a week later Jenny contacted the lender again asking to reduce her payments, and the lender agreed to reduced payments of $30 a week. The same day Jenny made a $1,300 purchase, taking her account up to the $3,000 credit limit.

Jenny continued to struggle to make the $30 payments and in December the lender agreed to reduce the payments to $21 a week. Jenny made the $21 payments reliably, and stopped using the account for new purchases, until May 2023 when Jenny’s payments stopped suddenly.

The lender sent a field agent around to visit Jenny and Jenny said she had been in hospital and could now only afford $5 a week. The lender agreed to reduce the payments to $16 a week, but Jenny could not afford even $16 a week and she continued to miss payments.

In November Jenny went to a community lawyer for help. The lawyer was concerned that the lender had not met their responsible lending obligations and contacted the lender for comment. The lawyer also said that Jenny was extremely unwell with a reduced life expectancy.

The lender responded that they had no evidence that Jenny was experiencing financial hardship and because the revolving credit account had been set up before responsible lending obligations were introduced, Jenny was entitled to spend up to her credit limit.

The lawyer did not agree and, on Jenny’s behalf, complained to FSCL.


We needed to consider whether responsible lending affordability assessments introduced into the Credit Contracts and Consumer Finance Act 2003 (CCCFA) in 2015 applied to Jenny’s revolving credit facility.

We also asked whether the lender, in their dealings with Jenny, had exercised the care, diligence, and skill of a responsible lender when they allowed her to increase her debt knowing that she was struggling to pay $40 towards her existing account balance.


Because Jenny had opened her revolving credit account in 2001 and had a $3,000 credit limit before 2015, before the CCCFA obliged lenders to check a borrower can afford to repay a loan, Jenny was able to borrow up to the $3,000 credit limit without going through a loan application process to check loan affordability every time she used the account.

However, we said that the lender had failed to meet their obligations to exercise the care, diligence, and skill of a responsible lender under section 2(a)(iii) of the CCCFA when allowing Jenny to borrow an additional $1,300, knowing she was struggling to pay her existing debt at $40 a week.


We proposed that the lender refund all the interest and fees relating to the $1,300 purchase, reducing Jenny’s debt from $2,500 to $1,000. The lender said they did not agree with our decision but would accept it. Jenny accepted the decision, and the complaint was resolved on this basis.

Insights for consumers and participants

From 6 June 2015 lenders are obliged to check a borrower can afford to repay a loan without experiencing financial hardship, but this obligation did not include debt that already existed on 6 June 2015. This is because the CCCFA is not retrospective and only applies to lending decisions made after 6 June 2015. However, more general provisions within the CCCFA still require a lender to exercise the care, diligence, and skill of a responsible lender when dealing with their borrowers. It was our view that allowing Jenny to borrow more money, knowing she was struggling to pay her existing debt, was not the action of a responsible lender.