When dealing with a niche loan scenario you may find you require the use of a lender who is not on Connective’s extensive lender panel. But there are risks you need to consider before you make your choice particularly when sourcing funding from private funders or non-bank lenders.
Understanding private funders or non-bank lenders
Some non-bank lenders or private funders might not hold an Australian Credit License. In addition, they are not a bank, credit union or building society so don’t have an authorised deposit-taking institution banking license.
Non-banks are not regulated by Australia’s Prudential Regulatory Authority (APRA), and only by the Australian Securities and Investments Commission (ASIC).
What does this mean for you?
If you consider a non-panel lender, you must ensure they hold an Australian Financial Compliance Authority (AFCA) membership.
This is to protect your business. If they do not have an AFCA membership and a complaint is made, where the lender is partially or fully at fault, you may also be liable for the full financial compensation.
Before considering an off-panel lender check the following:
- Have an extensive look at our lender panel and do a Brokerpedia search. You may find a lender that you are not accredited with that can assist your client.
- If you are still unable to find a solution on our panel, contact lender BDM’s from our panel to discuss your scenario.
- Engage your broker peers through the Connective Community or directly. They may be able to suggest panel lenders and/or share their experiences with non-panel lenders.
If you still can't find a solution for your client from our lender panel and you want to progress with an off-panel lender make sure you do your due diligence.
- Complete an internet search to learn more about the proposed lender and check out reviews.
- Ensure the proposed lender has an Australian Credit License and AFCA membership.
- Contact your PI insurer to confirm your policy will cover this transaction.
- Talk to your Connective BDM.
- Email the Compliance team (firstname.lastname@example.org) seeking the use of the specific lender.
Once you’ve done this, you need to submit a request to use the lender.
Requesting one-off approval to use an off-panel lender:
In this email include:
- The client's name, loan amount, loan purpose, security, LVR and interest rate.
- Panel lenders which were considered in the loan scenario
- The reason that your client’s needs were not serviced/approved by any of our current list of panel lenders.
- Provide a summary of the proposed lender. This includes their AFCA membership number.
Please do not hesitate to contact the compliance team for any further assistance.