AMM will embrace meaningful responsible lending to ensure that borrowers obtain the right loan at the right time. Here’s an article from Mortgage
Business in which AMM COO Kym Dalton explains the shift in delivery of financial education to borrowers.
Responsible borrowing and spending need to be facilitated through context-driven financial literacy, according to the co-founder of Australian Mortgage Marketplace.
While responsible lending has been the main focus of regulatory and media scrutiny this past year, Kym Dalton, the co-founder and COO of Australian Mortgage Marketplace (AMM), stressed the importance of responsible borrowing and spending, which he said are “interlinked”.
Speaking on The Adviser’s latest webcast on responsible lending, he said that such responsible borrowing and spending requires a shift in the delivery of financial education to borrowers – that is, it needs to be more context-driven.
“Seemingly, every time we have a commission or a report, there’s a general clamour for increased financial literacy… That’s quite often like a faith-based mission or a conscience sale because it’s my opinion that generalised financial literacy really doesn’t have much impact,” Mr Dalton said.
“I would endorse increased levels of financial literacy, but I am a passionate believer that it has to be approximate to purchases and it has to have context.
“It has to be related to the product that’s being sought or required to have real meaningful impact.”
The AMM chief operating officer noted that the importance of context-driven financial literacy is further supported by a “phenomenon called the optimism bias”, where borrowers apply for loans without factoring in potential risks.
“People actually apply for loans in the expectation that things won’t go wrong or things will get better,” Mr Dalton said.
“I think it’s behoven upon lenders and brokers to actually just be aware of the optimism bias and encourage people to actually borrow responsibly.”