What is the difference between a regulated and unregulated loan? – RedZed

What is the difference between a regulated and unregulated loan?


By Adrian Fisher September 22, 2017

If you run a business you may have come across the terms regulated and unregulated loan. In this post, we break down the terminology to dispel confusion and detail our commitment to responsible lending — and what it means for you.

What’s in a name?

In a nutshell, ‘unregulated’ loans are those that do not have consumer protection under a particular piece of legislation called the NCCP. The reason they don’t fall under this is that the funds being lent are not being used predominantly for consumer use. Examples of loans that fall into this category are loans that are in a company name, a loan that is being used to purchase business equipment. In these instances, the government deems that you are acting as a sophisticated borrower (who is likely to be receiving specialist advice from someone like an accountant or financial planner).

Regulated loans, on the other hand, were designed to provide protection to consumers. This is represented within the National Consumer Credit Protection Act  (NCCP). This legislation provides a wide range of protections to ensure that any loan offered to a consumer is “not unsuitable”. Whilst this is unusual terminology – it basically means that both the mortgage broker and the lender need to make reasonable enquiry into a borrower’s circumstances to ensure that any loans are not inconsistent with the needs and objectives of the borrower. It is one of the main reasons that borrowers are asked to provide so much information when applying for a loan. It’s the NCCP live and in action – and for borrower’s, whilst it may be a little painful, it is about protecting you during one of the most significant financial decisions you will make.

Responsible Lending

Different borrowing structures and different loan purposes determine which loan is appropriate for your particular circumstance. To protect your interests, Specialist Lenders like RedZed are guided by the principles of Responsible Lending. We operate only through a handpicked accredited broker team to offer collaborative services built on transparency and individual service.


Any content on this website is general only and does not take into account your particular circumstances and needs. Before acting on any content you should assess or seek advice as to whether it is appropriate for you.


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