Money3's serviceability assessment differed significantly from...

Money3's serviceability assessment differed significantly from industry standards in several key ways:

1. Arbitrary expense amounts: Money3 applied arbitrary expense amounts from an internal "product guide" instead of assessing borrowers' actual financial situations1. This included using fixed amounts for general weekly living expenses, rent, and dependent children, derived from their own staff survey rather than individual circumstances1.
2. Understated expenses: The serviceability assessments consistently understated borrowers' reasonably necessary expenses, leading to inaccurate affordability calculations1.
3. Incomplete information gathering: Money3 failed to make reasonable inquiries about or verify consumers' financial situations, often relying on incomplete application forms from brokers without direct interaction with borrowers1.
4. Lack of individual assessment: The company did not assess whether credit contracts met consumers' requirements or objectives, nor did they determine if contracts were unsuitable for specific consumers13.
5. Absence of assessment period: Money3 did not state the period for which any assessment covered, contrary to standard industry practice1.

In contrast, industry standards and regulatory expectations typically require:

• A more comprehensive assessment of borrowers' financial situations, including actual income and expenses4.
• The use of a serviceability buffer, which APRA expects to be at least 3.0 percentage points above the loan interest rate, to ensure borrowers can meet repayments if interest rates rise456.
• Proper verification of borrowers' financial information and consideration of their individual circumstances3.

Money3's practices deviated significantly from these standards, potentially putting vulnerable consumers at risk of financial hardship23