Action: A clawback fee is not enforceable under Best Interests Duty
What you must do:
The Quote on file is dated after 1 January 2021 and lists a clawback fee. Clawbacks are no longer permitted under the Best Interests Duty Obligations. Please acknowledge you understand this fee is not enforceable.
Why is this important:
Under the Best Interests Duty obligations effective 1 January, recouping a clawback fee from your customer is not permitted. There are strict anti-avoidance provisions in the new laws so introducing a fee structure that mimics the recovery of a clawback is also prohibited.
Action: Unless signed prior to the application being lodged the Quote is not enforceable.
What you must do:
If a Credit Quote has been signed and accepted please provide evidence this was completed prior to the lodgement of the loan to the lender. If the Credit Quote was not signed or not signed until after the lodgement of the loan, please acknowledge you understand this Credit Quote is not enforceable.
Why is this important:
Under Section 114 of the National Consumer Credit Protection Act (2009), if a fee is to be charged, a Credit Quote must be provided, signed and accepted prior to credit assistance being provided (i.e. prior to the loan being lodged to the lender). If the Credit Quote is either not signed and accepted or not signed until after the lodgement of the loan to the lender, the Credit Quote is not enforceable under Section 114.
Action: Unless the Quotes states the correct maximum amount of fees payable, the Quote is not enforceable.
What you must do:
If a Credit Quote which states the correct total maximum fees payable has been signed and accepted please provide evidence this was completed prior to the lodgement of the loan to the lender. If the Credit Quote does not include the maximum fees payable and was not signed or not signed until after the lodgement of the loan, please acknowledge you understand this Credit Quote is not enforceable.
Why is this important:
Under Section 114 of the National Consumer Credit Protection Act (2009), the Credit Quote must specify the maximum amount that will be payable by the customer. If the quote does not specify the total maximum amount which may be payable, the Credit Quote is not enforceable.
Action:
1. Provide evidence of how you undertook reasonable enquiries and populate the needs analysis.
2. Provide evidence of how you undertook reasonable enquiries prior to the submission of the loan.
What you must do:
The Needs Analysis must be completed, either through the Questionnaire or via the Client Centre to demonstrate you have undertaken reasonable enquiries into the customer’s needs and requirements prior to making a product recommendation.
If you used an enquiry form other than the Connective Needs Analysis, please (A) upload evidence of this form to confirm the customer’s needs and requirements were discussed prior to the recommendation being made and (B) populate the Needs Analysis questionnaire or Client Centre with the verified responses obtained on your form.
Please note, it is a mandatory requirement that the Needs Analysis is generated in Mercury as the answers in this form populate into your Preliminary Assessment.
Why is this important:
Under Section 117 of the National Consumer Credit Protection Act 2009, before providing credit assistance to a customer, a Preliminary Assessment must be made confirming the loan is not unsuitable. To complete the Preliminary Assessment, certain inquiries must be made of the customer’s requirements, objectives and financial situation.
As an authorised representative under Connective’s Licence, to demonstrate adherence with the obligation to undertake inquiries of the customer’s needs and requirements, you are required to complete the Needs Analysis either through the questionnaires or the Client Centre.
Action: The needs analysis is not completed in full. Document how you undertook reasonable enquiries and populate the needs analysis.
What you must do:
The Needs Analysis must be completed in full either through the Questionnaire or the Client Centre to demonstrate you have undertaken reasonable enquiries into the customer’s needs and requirements prior to making a product recommendation.
Please ensure all sections of the Needs Analysis have been completed as the responses provided populate into the Preliminary Assessment to evidence your steps in undertaking reasonable enquiries.
Why is this important:
Under Section 117 of the National Consumer Credit Protection Act 2009, before providing credit assistance to a customer, a Preliminary Assessment must be made confirming the loan is not unsuitable. To complete the Preliminary Assessment, certain inquiries must be made of the customer’s requirements, objectives, and financial situation.
As an authorised representative under Connective’s Licence, to demonstrate adherence with the obligation to undertake inquiries of the customer’s needs and requirements, you are required to complete the Needs Analysis either through the questionnaires or the Client Centre.
Action: Provide evidence of how you undertook reasonable enquiries.
What you must do:
Please provide evidence of how the customer’s needs, requirements and objectives were obtained and recorded prior to making a product recommendation.
Why is this important:
Under Section 117 of the National Consumer Credit Protection Act 2009, before providing credit assistance to a customer, a Preliminary Assessment must be made confirming the loan is not unsuitable. To complete the Preliminary Assessment, certain inquiries must be made of the customer’s requirements, objectives, and financial situation. Please evidence how you captured and recorded this step in the credit assistance process.
Action: Provide evidence of how you undertook reasonable enquiries prior to the submission of the loan
What you must do:
The needs analysis or fact find held on file evidences this was completed after the submission of the loan to the lender. Please confirm and provide evidence of the steps you took prior to the lodgement of the loan to undertake reasonable enquiries of the customers' requirements, objectives and financial situation.
Why is this important:
Under Section 117 of the National Consumer Credit Protection Act 2009, before providing credit assistance to a customer, a Preliminary Assessment must be made confirming the loan is not unsuitable. To complete the Preliminary Assessment, certain inquiries must be made of the customer’s requirements, objectives and financial situation.
Action: Provide evidence of how you undertook reasonable enquiries.
What you must do:
A fact find form is held on file which captures the customer’s personal information such as name, date of birth, address, employment, assets and liabilities however it does not capture the customer’s needs and requirements sufficiently. Please provide evidence of how the customer’s needs, requirements and objectives were obtained and recorded prior to making a product recommendation.
Why is this important:
Under Section 117 of the National Consumer Credit Protection Act 2009, before providing credit assistance to a customer, a Preliminary Assessment must be made confirming the loan is not unsuitable. To complete the Preliminary Assessment, certain inquiries must be made of the customer’s requirements, objectives, and financial situation. Please evidence how you captured and recorded this step in the credit assistance process.