As a Connective broker, you are already familiar with the four C’s of Credit — collateral, capacity, character and conduct. The six C’s of compliance build on this foundation and help you demonstrate that your recommendations are compliant, well documented and aligned to your client’s needs.
Use this guide to understand what each C means in practice and how to apply it throughout your client’s loan journey.
Circumstances
Understanding your client’s circumstances is essential to meeting your responsible lending obligations and ensuring the recommended product is not unsuitable.
You must clearly understand:
What the client is trying to achieve
Their current financial position
Any constraints or risks that could affect the transaction
Completing a Needs Analysis helps you document this understanding and supports your assessment of suitability.
Calculators
Completing calculators in Mercury is not just about determining borrowing capacity. The calculators provide evidence that the client can complete the transaction and that the recommended product is suitable.
Capacity
Capacity demonstrates the client’s ability to service the loan. This remains critical to every application.
Funding position
The funding position shows how the client will meet settlement costs using their net funds available.
If there is a deficit, you must record commentary explaining how settlement will be met. This may include:
Gifted funds
Additional lending
Equity from another security
The explanation must be clear and reasonable.
Product comparison
The product comparison calculator demonstrates that you:
Understood the client’s circumstances
Completed a needs analysis
Considered available options
Selected suitable products for the client
When completed correctly, calculators automatically populate into compliance documents and evidence not just serviceability, but fees, charges and surplus funds at settlement.
Important: Incomplete or inaccurate calculators weaken your compliance position and may trigger follow-up reviews.
Consideration and Choice
In most situations, your recommendation should provide the client with more than one lender option.
You must:
Present suitable options
Allow the client to choose
Record in Mercury why the final lender was selected
You should not make the decision on behalf of the client.
If only one option is available, you must record a clear explanation in Mercury outlining why no alternatives were suitable.
Collect, Check, Cross-reference and Confirm
Submitting an application involves more than collecting documents and forwarding them to the lender.
You are responsible for verifying that all information:
Is accurate
Meets lender requirements
Matches what the client disclosed during interviews
This includes checking that:
Documents are in the client’s name
Payslips are recent (generally within four weeks)
Bank statements show the client’s name and are not screenshots
Sensitive identifiers (such as tax file numbers) are removed where required
If information does not align with what the client has stated, you must investigate further.
Example:
If bank statements show large lump sum deposits, you must confirm and record the source of funds before proceeding.
Communicate (record keeping)
Effective communication is critical to responsible lending and complaint prevention.
You must store all relevant communication in Mercury, including:
Emails and text messages
File notes
Conversations with third parties such as valuers, accountants, conveyancers and settlement agents
Good communication also means:
Asking questions when client instructions are unclear
Adjusting your communication style for complex transactions or vulnerable clients
Increasing explanations where financial literacy may be limited
Many compliance complaints arise from communication breakdowns. Clear, consistent communication helps protect both you and your client.
Consent
Client consent is required before undertaking additional checks or speaking with third parties such as employers or accountants.
Do not assume consent has been given.
You must also ensure your email signature includes a short-form privacy statement, including:
“By asking us to assist with your credit needs, you consent to the collection and use of the information you have provided to us for the purposes described above.”
What this means for your business
Compliance is not about complexity, it reflects good business practices and common sense.
While there are many other “C’s” in compliance, applying these six consistently will help you:
Meet legislative and regulatory requirements
Reduce compliance risk
Improve client outcomes and satisfaction
Need help?
If you need help understanding or applying compliance requirements, contact your Partnership Manager or email [email protected].