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MFAA Prosper : Mortgage and Finance Brief 06
PLAN Australia has seen a dramatic shift in broker licensing intentions away from Australian Credit Licences towards becoming appointed Credit Representatives. Tracey Crevatin (pictured), Relationship Manager for PLAN Australia in Victoria, said that as brokers have become more knowledgeable about the responsibilities involved in holding an Australian Credit Licence, PLAN Australia has seen a marked shift away from ACL towards becoming an appointed Credit Representative. “We surveyed our members in August about their intentions regarding licensing and their level of confidence in choosing the right option for their business. We then ran a series of national Roadshows later that month, to outline our support services to brokers under both models,” says Crevatin. PLAN Australia found the Roadshows, engagement with relationship managers and regular communications about NCCP gave brokers a bet ter understanding of their obligations under both models. This led to the shift towards the credit rep model, from 32% in favour in August to around 70% now. “Some brokers found that the application process to become a licensee was more involved than they initially thought. However, it was the realisation that the obligations of being an ACL holder would be more onerous and time-consuming that led to many brokers opting to change their approach. The brokers who are still opting for the ACL option now better understand the pros and cons,” says Crevatin. Disclosure regime The disclosure regime is scheduled to start on 1 January 2011. The MFA A has asked for an extension given that the regulations had not been published when this report was prepared. The following table shows when disclosure documents must be given to borrowers. “ Some brokers found that the application process was more involved than they initially thought” DOCUMENT BY WHOM KEY PURPOSE WHEN? Credit guide Lenders and lessors, servicers of exempt special purpose funding entities, legal assignees of loans and leases, and debt collectors. General information about the licensee’s business, including IDR, EDR information Promptly after it appears a loan may be made or a lease entered. No credit guide is required for principal increases. Credit guide Credit assistants (brokers) who are licensees. As above As soon as practical after it becomes apparent to the licensee that it is likely to provide credit assistance. Credit guide Credit assistants (brokers) who are credit representatives. As above As soon as practical after it becomes apparent to the licensee that it is likely to provide credit assistance. May be combined with the licensee’s credit guide. Quote Credit assistants (brokers) Fees payable by the borrower to the credit assistant Before providing credit assistance. The borrower must sign and date the quote or otherwise indicate acceptance of it. A copy must be given to the borrower. The quote can be combined in the credit proposal. There is no need for a quote if the borrower is not liable to pay the broker any fees. Credit proposal document Credit assistants (brokers) Disclosure of commissions paid to the broker by third parties Before providing credit assistance. There is no legislative requirement for a statement of advice or product recommendation. Copy of credit assessment Lenders and lessors Provide details to the borrower of the facts used by the lender/ lessor to make a loan/ lease/principal increase Upon request by the borrower within 7 years of the date of the credit contract, lease contract, or principal increase. Only required to be given if the loan or lease is entered or loan principal increased. Must be given within seven business days if the request is made within two years, otherwise within 21 business days. (Extended to 15 and 25 business days when there has been an assignment – ie the lender/lessor of record has changed). Copy of preliminary credit assessment Credit assistants (brokers) As above Upon request by the borrower within seven years of the date of the credit assistance being provided. Only required to be given if credit assistance was given (which includes a recommendation to remain in an existing loan or lease). Mor tgage & Finance brief | 47 Back Office NCCP case study - PLAN Australia
Mortgage and Finance Brief 05
Mortgage and Finance Brief 07