Responsible lending obligations apply to any consumer loan provided for personal, household or domestic purposes. This means any consumer asset finance, leases or personal loans must meet NCCP obligations. If you are a mortgage broker, any consumer asset or personal lending applications are subject to best interests duty.
Use this guide to identify when the National Consumer Credit Protection Act 2009 (Cth) (NCCP) applies, complete the right compliance documents, and keep appropriate evidence on file in Mercury Nexus.
Important: This article is for mortgage brokers writing consumer asset finance and personal loans.
For asset finance only brokers, please see the following articles for relevant guidance:
When NCCP obligations apply
If the borrower is a natural person and the loan is for personal, household or domestic purposes, you must comply with responsible lending obligations.
This includes:
Disclosure requirements
Unsuitability assessment requirements
The same core compliance obligations that apply to home loans
For example, if a client is purchasing a vehicle for personal use, NCCP obligations apply.
Complete the required compliance documents
For consumer asset finance deals and personal loans, complete all relevant compliance documents, including:
Credit Guide
Quote (if you are charging your client a fee for service)
Needs Analysis
Combined Preliminary Assessment & CPD
You must also:
Complete a credit report*
Collect supporting documentation
Make reasonable enquiries about the client’s requirements and objectives
Verify the client’s financial information
Ensure the loan is not unsuitable
Ensure you hold sufficient accreditations to meet BID obligations and demonstrate how the proposed lender is in the client’s best interests (refer to additional information under BID section)
*Important: make sure privacy consent is obtained prior to completing a credit report
Make reasonable enquiries
The level and type of enquiries will vary based on the client’s circumstances.
Consider:
The client’s responses in the Needs Analysis questionnaire
Any risk indicators identified during discussions
Information that may affect the client’s ability to meet repayments
If issues arise during your assessment, make further enquiries to confirm the product is not unsuitable.
If you are a mortgage broker, BID requirements apply for consumer asset finance and personal loans
As a mortgage broker, you are subject to the NCCP’s Best Interests Duty and the conflict priority rule when dealing with any consumer credit.
For consumer asset finance, this means you must:
Act in the client’s best interests
Prioritise the client’s interests where a conflict exists
Reduce commissions to the lowest amount the lender will pay
Generate a credit quote if you choose to charge a fee for service
Keep evidence of your product comparisons on file
Show how the recommended product aligns to the client’s requirements and objectives
Important: Keep clear evidence showing why the recommended product meets the client’s requirements and objectives. This should include a documented product comparison and correspondence between you and the client. The product comparison can be generated via the product quote produced in Mercury Nexus.
Understand when consumer leases trigger obligations
Under section 8 of the NCCP, you provide credit assistance if you:
Suggest or assist a consumer apply for a particular consumer lease or personal loan with a specific lessor or lender, or
Suggest or assist a consumer apply for an increase to the credit limit of a particular consumer lease or personal loan with a specific lessor or lender, or
Suggest that the consumer remain in a particular consumer lease or personal loan with a specific lessor or lender
These activities trigger responsible lending obligations.
Asset finance and personal loans in Mercury Nexus
When creating a new Opportunity in Mercury Nexus:
select Asset Finance as the Opportunity Type
the disclosure documents workflow will appear
follow the tailored compliance document sequence provided
Access asset finance and personal loan records
To access asset finance Opportunities:
open the CRM app
select Opportunities
choose Asset Finance from the Opportunity Type filter
Compliance documents are available within the Opportunity under the Disclosure documents tab.
Keep the right evidence on file
Treat consumer Asset Finance deals with the same diligence as home loans.
Make sure you:
Complete all compliance documents
Verify income and liabilities thoroughly
Document your enquiries and reasoning clearly
Keep supporting documents and assessment records on file
Important
To meet servicing requirements, ensure you have evidence on file of the calculations you relied on for the application. This should be independent of the lender servicing calculator.
What happens next
Once you have completed the required documents and gathered supporting evidence, review the file to confirm:
The client’s requirements and objectives are clearly documented
The recommended product is supported by your comparison and reasoning
All disclosure documents are complete
The file contains evidence to support servicing and suitability
Need help?
If you need help with Asset Finance compliance requirements, contact your Partnership Manager or email [email protected].