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Living Expenses and the LIXI Standards
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Overview

The lending industry is currently faced with an unprecedented level of focus. Several factors continue to influence the way in which a consumer provides or a lender uses data to assess a credit application, particularly around the verification of a consumer's living expenses. To support the evolving requirements of the industry, LIXI is inviting input to help implement appropriate changes to the LIXI data standards.
 

Industry Changes

The categories into which a customer's living expenses are allocated in a credit application were last updated in the LIXI data standards in 2016 through an industry consultation process. Recent industry changes require us to now revisit these standardised categories:

  • Some lenders have varied the categories used when collecting customer declared living expenses, which is detrimental to the customer and broker experience. 
  • The recent Royal Commission has questioned whether the use of the Household Expenditure Measure (HEM) constitutes an adequate verification of a borrower’s expenditure. Australia's major lenders continue to support the use of HEM as an important component of their expense verification and credit assessment process. 
  • The methodology behind the calculation of HEM has changed, and the categories of data now no longer correspond with the LIXI categories on a like-for-like basis.
  • Data aggregation services offer automated capture of account transaction data that can populate or verify income and expense data at a more granular level than ever before. 
 

Next Steps

LIXI has received several change requests from our members, and discussion of these requests has commenced. We are seeking collaborative input from our members to help in clarifying the requirements, proposing and endorsing the changes, and implementing appropriate changes to the LIXI Data Standards.

The users of our standards are encouraged to participate in the change management process and avoid implementing variations in the agreed categories. This will improve the broker and customer experience and minimise the potential for data integrity issues to arise.
 

Further Information

A paper has been published by LIXI (available here) that outlines these factors and the changes required in greater detail.
 

What is LIXI?

The vision of LIXI Limited (LIXI) is to enable seamless and innovative data exchange across the lending industry by providing world-leading data standards, tools and education. LIXI is a collaborative community of industry participants that has developed data message standards for the lending industry in Australia and New Zealand since it was established in 2001 as a member-based, not-for-profit company in Australia.

Regards
Shane Rigby
LIXI CEO

Photo Credit: rawpixel on Unsplash

 

2018 LIXI Limited, All rights reserved.


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