What are your obligations?
As a broker, you must complete a thorough assessment to ascertain if a customer can adequately service the debt. It does not require you to strictly adhere to APRA’s guidelines. However, you do need to ensure that you are performing the preliminary serviceability assessment using your own calculator because you need to be able to justify the outcome and explain the arithmetic that was used to ascertain if a customer could adequately service the debt.
This means that while a lender’s servicing calculator should not replace your preliminary assessment using the Mercury borrowing capacity calculator, it is mandatory to complete the lender’s servicing calculator as well. This ensures that the scenario meets the lender’s specific servicing rules, particularly for consumer asset finance and personal loan applications.
If you conduct your own preliminary assessment completely independent of the lender, then obviously it is going to have a very different outcome to the serviceability assessment completed by the lender. Therefore, unless you are able to explain the mathematics of your client’s ability to fit repayments into their life, you are not complying with the legislation.
Additionally, you must upload the lender’s borrowing capacity calculator as an attachment to the Opportunity and include an explanatory note if the Mercury calculator does not show servicing.
How do you adhere to this mandatory obligation?
Note: For a step by step instruction on how to use the Borrowing Capacity Calculator please refer to:
If the borrowing capacity is sufficient for your client’s requirements and objectives then you can proceed as normal. If the borrowing calculator falls short of the client’s requirements then you must add a file note to mercury as to why the client is able to service a higher borrowing amount.
Additionally, in cases where the liabilities match those submitted in ApplyOnline (AOL), you may rely solely on the lender’s servicing calculator to streamline the process. However, this does not replace the compliance requirement to evidence serviceability using the Mercury calculator.