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‘No economic sense’: Tic:Toc breaks ranks with peers on lending changes

Digital lender Tic:Toc’s founder Anthony Baum has broken ranks with the finance sector to oppose the impending repeal of responsible lending laws, warning the measure will only drive house prices higher.

In a move supported by banks but opposed by consumer groups, the government plans to remove responsible lending obligations later this year, saying it will simplify loan approval processes but still protect vulnerable customers. Senate debate on the changes was delayed last month amid uncertainty about whether the government has the required crossbench support.

Tic:Toc founder Anthony Baum.

Tic:Toc founder Anthony Baum.Credit: Dean Martin.

Tic:Toc, which is 28 per cent owned by Bendigo and Adelaide Bank, has taken a different view to its peers, as it seeks to promote its technology for automating banks’ approval processes.

An economist by training, Mr Baum argued repealing the laws was unnecessary and would drive prices higher because he believed it would allow people to borrow more.

“If we’ve got house prices growing at double digits, all the removal of responsible lending is going to do is fuel that boom,” Mr Baum said.

“So why are we doing that? It makes no economics sense and no sense for the Australian consumer, because at the end of the day the supply of credit is strong, the interest rate settings are very favourable and the outcome of those two things will be higher house prices.”

Banks insist the changes will not increase customers’ borrowing capacity, though some economists have raised similar concerns to Mr Baum’s.

Tic:Toc, which has settled more than $1.5 billion in loans since launching in 2017, has developed technology to automate compliance with responsible lending laws, allowing quick loan approvals.

Mr Baum acknowledged Tic:Toc therefore had a competitive advantage when it came to dealing with the current responsible lending laws. However, he added that other lenders could easily develop the technology needed to offer a similar service to customers.

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