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MFAA Prosper : Mortgage and Finance Brief 07
Top tips From 1 April 2011*, brokers who deal with consumer credit customers will be required to use new credit disclosure documents. Here are some tips that could make that process a lot easier. Words Char mian Holmes and Amanda Ip, Gold Seal What are the new disclosure documents? Below is a simple diagram showing the new credit disclosure documents and when they will need to be provided during a typical broking scenario (once all requirements apply from 1 April 2011). * Brokers should be aware that 'interim disclosure requirements' apply from 1 January 2011 and require brokers to give customers information about their external dispute resolution process and their maximum fees and charges. These interim requirements apply until 1 April 2011, after which the new disclosure documents must be used. Gold Seal is a specialist legal and compliance service provider to the mortgage broking and financial services sectors. A full copy of this article can be found at www.goldseal.com.au. Gold Seal has a set of template consumer credit disclosure documents available for purchase -- visit www.goldseal.com.au or call 02 8353 6600 for assistance. A key element of the responsible lending requirements requires brokers to assess that a loan or lease will not be unsuitable for the customer. Brokers may do this at any time within 90 days before you suggest the loan or help the customer apply for the loan. A loan will be unsuitable if the customer will be unable to repay the loan or can only do so with substantial hardship. Also if it does not match the customer 's requirements or objectives. • It is good practice for the assessment to show what information the broker took into account and the reasons why you considered the loan was not unsuitable. • Brokers only need to provide the assessment to the customer if they ask for it. However some brokers have decided to provide it when they suggest a loan • Commercially sensitive lending criteria does not need to be disclosed to the customer. PRELIMINARY ('UNSUITABILITY') ASSESSMENT Top tips: Client provides information about their requirements, objectives and financial situation Broker provides quote Broker makes further enquiries, takes reasonable steps to verify client's financial situation and selects loan(s) to recommend Broker conducts preliminary assessment and provides credit proposal Client approaches broker for credit assistance Broker provides credit guide 42 | Mortgage & Finance brief BackOffice
Mortgage and Finance Brief 06
Mortgage and Finance Brief 08