Under the NCCP Act section 8, if you suggest to your client to remain in a particular credit contract you have provided credit assistance. For our brokers, you may be considered to have provided credit assistance by facilitating a rate review.
With the implementation of the Best Interests Duty, brokers must be able to demonstrate they have undertaken the steps necessary to comply with NCCP when helping a customer to vary an existing loan. This will protect you and your business in the event a dispute or complaint arises in the future.
Common sense approach:
Under the NCCP, you need to make reasonable enquiries into the client’s financial situation. Connective does not expect you will collect and verify the same level of documentation for a rate review that you would for a new client.
However, you do need to confirm that there have been no material changes to the client’s financial situation since the application was lodged and document a note to confirm this step was completed.
If the customer informs you that material changes have occurred to their financial position, you must ensure the customer can service the loan in their new position. Remember, you are recommending they remain in their credit contract, and this constitutes credit assistance.
From a best interest’s duty perspective, reducing the interest rate and repayments is clearly a more suitable outcome for the client. However, there may be lenders who are more suitable for the client. Having a conversation with the client about their intentions and whether they want to consider a refinance is required and needs to be documented.
As always, the compliance team are here to support you. Simply click your help icon in Mercury to get in touch or email us at [email protected] and we’ll be on hand to help!
The Rate Review feature in Mercury Nexus allows brokers to capture and track rate reviews for their customers directly within each opportunity. Click on the link below for more information.