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MFAA Prosper : Mortgage and Finance Brief 06
I f you decide to apply for a licence, the MFA A provides a free licensing kit with examples of all the documents you need. This can be accessed from the MFAA website in the members’ area. Even if you have decided to be a credit representative, it’s a good idea to review the licensing kit so that you understand the kinds of obligations your licensee is undertaking and what your licensee will expect of you. Should I be a credit rep or obtain a licence? This is not a once-in-a-lifetime choice. If you choose to be a credit representative, you can later apply for a licence. If you choose to apply for a licence, you can subsequently surrender the licence and become a credit representative. What happens if I decide to apply for a licence? If you choose the licensing option: • you can appoint your own credit representatives; • you will need to satisfy all the requirements (see more about this below). What happens if I decide to become a credit representative? If you choose the credit representative option, you need to check whether the authority the licensee is giving you is wide enough to allow you to conduct all the types of credit business that you want to. What do I need to do if I appoint loan writers? You will need to ensure that any loan writer is a “fit and proper” person and in particular has not committed any serious offence, been bankrupt, refused or disqualified by a professional or reg ulatory body, or in any other way adversely commented upon unless that matter is explained to your satisfaction: You need to obtain: • recent criminal history check; • recent credit history check; • character declaration; • employment/contractor contract; • A SIC banned or disqualified person’s check; • independent reference check; • conflict of interest declaration; • verification of qualifications. What’s the education requirement for brokers? A ll brokers must have obtained a Certificate IV in Financial Services (finance/mortgage broking) by 30 June 2014 . Brokers need to undertake not less than 20 hours of CPD each year. Do I have to have a trust account which is audited? Most brokers will not maintain a trust account as they do not hold money on behalf of borrowers. If you do hold money on behalf of borrowers, you will need to establish a trust account and have it audited. Do I need a breach register? Whether you’re a licensee or a credit representative, you should maintain a breach register. The MFA A licensing kit contains an example breach register. Unlike the AFSL regime, there is no obligation to report breaches. The draft annual certificate to be filed by ACL holders does not require this information to be provided annually. However, it is likely that on an audit ASIC will want to review your breach reg ister so it is important it is kept up-to-date w ith detailed explanations of how the breach occurred, and the action you have taken to ensure there is no repetition. What will I need if I decide to apply for a licence? The following list is not exhaustive. For further details see the MFA A licensing kit. You will need to be able to demonstrate your arrangements for: • monitoring and reporting on representatives; • IT system; • IDR procedures; • EDR membership; • financial resources; • professional indemnity insurance; • conflict of interest; • outsourcing procedures. What authorisations (types of licence) will I seek? Question A7 of the licensing application asks whether you will act as a credit assistant or a lender of record or both. Mortgage managers, aggregators and larger broking companies should normally select both as they may become a lender of record as a result of making loans incidental to their business or as a result of having to buy-back a loan under their funding arrangements. This arises because making NCC (Code) reg ulated loans or purchasing them can only be done by licensed people. If selecting this option, answer question 8A by saying “other” and inserting “lending incidental to our business and potentially purchasing loans under buy-back obligations” The cut-off date for electing to be a credit representative or lodging your application for an Australian Credit Licence is fast approaching. Many businesses are worried because “they don’t know what they don’t know”. Here’s a checklist to help you verify that you have covered all the bases. Words Jon Denovan, Partner, Gadens Lawyers NCCP checklist 46 | Mor tgage & Finance brief Back Office
Mortgage and Finance Brief 05
Mortgage and Finance Brief 07