In a world where you often work within a digital environment, you need to ensure you meet legal requirements while also mitigating risk to both yourself and your business.
Conducting client meetings remotely
The requirement that lenders impose to meet face-to-face with customers is strongly linked to the Anti-Money Laundering (AML) and Counter-Terrorism (CT) legislation. The concept of Know Your Customer(KYC) is based on the fact that you conduct reasonable due diligence to ensure that you know who you are doing business with. Meeting your customer face-to-face also mitigates the risk of identify fraud.
The Australian Securities and Investment Commission (ASIC) have indicated that you can meet Responsible Lending obligations using either an online or face-to-face approach. The key requirement is that you, as the broker, should take appropriate and reasonable steps to make enquiries of your client and to verify the information provided by them.
However, here at Connective, we recognise that there will be circumstances where meeting your customer face to face is not easy. For example:
a client that works remotely in a mine in outback Australia and therefore cannot easily get to a broker or to a branch to be identified.
a client who is working or traveling overseas.
In these situations, it's important to put controls in place to mitigate risk and to do what is reasonable. There is technology available to support this.
Recommendations to mitigate risk
We recommend the following when conducting a non-face-to-face interview with your client.
Conduct a video conference that enables you to record the meeting. (Skype, Zoom, Go to Meeting are some secure service providers).
Let the client know that you are going to record the meeting. If the client says no, this will raise a red flag. A client who is serious about getting credit and is a genuine borrower won't mind being recorded.
Have a certified copy of the client's identification provided to you (and if overseas, get it from the Consulate Official). This will need to be provided to you prior to the interview being conducted. Ask the customer to hold their ID next to them and cross check this to the original certified copy that has been provided to you.
Obtain certified copies of the client's bank account statements. Remember, as a Credit Representative of Connective this means:
three months of transaction statements - all clients
three months of dedicated savings history statements - if purchasing
three months of loan statements - if refinancing.
Refer to Overseas Income Requirements for details on verifying overseas income.
Seek lender approval via your BDM (as not all lenders allow a non-face to face meeting).
Clearly, disclose to the specific lender at the time of submitting the application that the interview was conducted by electronic means.
Make detailed notes about why this type of interview is being conducted (working offshore/interstate/etc).
Supporting documentation
You must take extra care to ensure that supporting documents have not been amended or doctored in any way. When relying on photocopies or scanned images, make sure you take the necessary steps to ensure that these documents have been appropriately certified to meet the lender's requirements and to satisfy your obligations.
You can email the client the mandatory compliance documents via Mercury. This will provide a record that these documents were sent to the customer. For documents that require a signature, have the customer print this off and send it to you with the original certified documents.
Verification Of Identity (VOI)
The Verification Of Identity (VOI) rules vary depending upon the state in which the mortgage is to be registered. Currently, the VOI rules apply to VIC, WA, SA, NSW, and QLD. This means that identification needs to be verified for the mortgage to be registered by the State Revenue Office.
Skype is not generally acceptable for this purpose, but it will depend upon the state where the property is located. We recommend you speak to the Lender BDM's to confirm the requirements. Depending upon the lender, a branch network may be accessible to the client, or alternatively, they may need to take their ID to Australia Post.