If you provide 'credit assistance' in relation to consumer lending purposes (personal loans and asset finance) then you must adhere to the responsible lending obligations and compliance requirements under the NCCP Act.
You must undertake three key steps:
- Make reasonable enquiries about the consumer’s financial situation, requirements and objectives.
- Take reasonable steps to verify the consumer’s financial situation.
- Make a preliminary assessment about whether the credit contract is ‘not unsuitable’ for the consumer.
Reasonable enquires - what does this mean?
The level and type of enquiries you make for each client will vary depending upon their circumstances, including the client’s own answers to questions within the Needs Analysis.
If during the course of your analysis you uncover matters that may impair a decision to provide credit to that particular client, you may need to make further enquiries to ensure that the product is not unsuitable.
What is credit assistance?
If you have a client who wants to purchase a car for personal use or wants to take out a personal loan for a holiday, then NCCP applies. The compliance documentation relating to Personal Loans are located in the Documents section > Merge Templates > Personal Loans- Compliance & Preliminary Assessment folders within Mercury. When you are creating the opportunity in Mercury, just select ‘Personal Loan’ and manually complete the compliance documentation relating to this client-loan application.
Defined in Section 8 of the Act, a person provides ‘credit assistance’ to a consumer if, by dealing directly or indirectly with a consumer in the course of, as part of, or incidentally to, a business carried on this jurisdiction by the person, the person:
b) suggests and/or assists the consumer to apply for an increase to the credit limit of a particular credit contract with a particular lender; or
c) suggest that the consumer remain in a particular credit contract with a particular credit provider
d) suggests and/or assists the consumer to apply for a particular consumer lease with a particular lessor; or
e) suggests that the consumer remain in a particular consumer lease with a particular lessor.
It is important to remember that the normal obligations that apply to a home loan are also required for any personal lending scenario. This means all compliance documents - Credit Guide, Quote, Needs Analysis, Credit Proposal Disclosure, and Preliminary Assessment must be completed for every Personal Loan. You must also make reasonable enquiries to ensure the loan is ‘not unsuitable’ and proper verification of all the information the client submits is also required.
Connective - here to support you
Did you know that the Compliance Support Team is available on Helpdesk? You can contact us by clicking the Help icon in Mercury and then selecting Compliance from the menu, or you can get in touch with us simply by emailing our Compliance Helpdesk directly at firstname.lastname@example.org
Whatever compliance questions you may have, we’re here to help.