.Identify compliance requirements Mortgage brokers face important compliance requirements, the foremost among them being the reasonable lending provisions of the NCCP Act.
Identify compliance requirements Mortgage brokers face important compliance requirements, the foremost among them being the reasonable lending provisions of the NCCP Act. The penalties for non-compliance include loss of license (for businesses) and removal from the industry (for individuals). If fraud is involved there may also be the criminal penalties of fines and / or imprisonment.Compliance requirements are not static. It is therefore important to stay up to date with them.Mortgage brokers also need to keep up-to-date with the actions of the regulatory authorities such as APRA and the Reserve Bank. Their actions may not amount to direct regulation, but through their effects on interest rates and bank lending these authorities can have a very direct impact on the business mortgage brokers are able to do.
(a) A key requirement of the responsible lending obligations is the ‘unsuitability test.’ What must a mortgage do to comply with the unsuitability test?No Mark1. Make reasonable enquiries about the borrower’s requirements and objectives /12. Make reasonable enquiries about the borrower’s financial situation /13. Take reasonable steps to verify that financial situation /1
(b) List the sorts of items a client’s requirements and objectives could include (as indicated by ASIC). Mark-the amount of credit needed or the maximum amount sought; -the timeframe for which it is required; -the purpose and benefit sought; and -whether the consumer seeks particular product features or flexibility, and understands the costs of these features and any additional risks. /2
(c) Leading credit providers and other financial organisations have code of ethics, sometime called codes of conduct. Select one of them and summarise it by itemising its main principles. MarkFALSE AND MISLEADING CONDUCT – Misleading and deceptive conduct and false and misleading representations by corporations in trade or commerce are prohibited under the Australian Consumer Law (ACL). A court may impose monetary penalties, grant injunctions to prevent the prohibited conduct continuing or being repeated or to require that some action be taken such as cancellation of contracts and an award of damages. The offence also overlaps with fraud under criminal law, so fines and jail sentences may also be imposed. /4
(d) In point form, list the key information that the NCCP Act requires to be contained in a Credit Guide. Mark-The licensee’s name, contact details and Australian credit licence number; -Details on any fees and charges payable by the consumer -Details of any commissions likely to be received from the lender;-The names of the licensee’s six main lenders; -Details regarding complaint handling, including contact details of internal and external dispute resolution processes; and -Information about the licensee’s obligation to provide a written copy of an unsuitability assessment upon request. /3
(e) It is important to keep up to date with compliance requirements so that the required changes can be made to organization procedures and product offerings.Suggest three sources that you can use. Mark1. Professional associations such as The Mortgage and Finance Association of Australia (MFAA)2. The Finance Brokers Association of Australia (FBAA) inform their members of changes to requirements before they happen3. The professional associations’ code of practice can also be used as a sound guidance to compliance requirements. /3
(f) Explain the requirement for Australian Credit Licensees to keep a training register.• Mark-ASIC requires a business’s compliance measures to be documented although it acknowledges that the level of documentation will vary from detailed policy and procedures manuals in larger organisations to checklists in smaller organisations. 27 -Once a compliance system has been established, it is implemented and maintained. Training has an important function in this process, but it is not enough on its own. Compliance and ethical behaviour must become a dominant value of the business. /2