As part of your Best Interests Duty obligations, you must present your recommendation in a way that clearly educates the client/s on how the recommendation is in their best interests. Furthermore, you should also articulate why you have recommended this option as opposed to the other options available.
The comments and inquiries may differ depending on the type of deal, whether it is residential, commercial, or asset finance.
Broker Comments
Home Loan
This section is intended for broker's comments on the application regarding compliance, which includes observations of the clients' financial position, the status of the property for which the loan is being written, completed verifications of everything related to the deal and finally disclosures and product suitability.
Explanations for selecting Interest only repayment and Fixed rate product fields will appear only if the corresponding product is selected as recommended.
Users can hover their mouse over the light bulb icon to get more information and clarification about each comment.
Users also have an option to import a note template into the comment via the 'plus' icon.
Monthly Financial Position
Monthly financial position table is the key element of responsible lending and best interest duty requirements.
Sections
Top Section
Top section relates to information relevant to the lender (servicing information), a position at the time of interview.
Net income - net income after tax
Total current repayment - sum of all current debt
Total proposed repayment - new debt repayments
Total current expenses - our Expense buffer calculation follows LIXI guidelines on expense items that are in and out of HEM. When expenses are collected, only those types of expenses that are in HEM will be compared to HEM, and if the sum of those items is less than HEM dictates, then the HEM figure will be used in the buffer calculation. In such a case, the total buffer expenses will be HEM + sum of items out of HEM.
Investment income from the new position is not current income, it is included as income in the monthly financial surplus table as opposed to the income tab.
This is the way how we display existing and proposed investment income:
New Investment income goes into the proposed and buffer position;
Existing investment income goes into the current, proposed and buffer position.
Bottom Section
Bottom section relates to the foreseeable changes (known to occur after the interview).
Add debt commitments ceasing - loan repayments stopping in the near future. Eg. car loan paid out.
Add income increasing - known promotion or increased income in the future. Eg. known upcoming promotion.
Add expense decreasing - known reduced expenses. Eg. school fees ceasing.
New debt commitments - desired future loans. Eg. Planning to buy a boat/car on loan.
Income decreasing - known income reductions. Eg. Planned maternity.
Expense increasing - known increased living expenses. Eg. Imminent school fees.
Columns
Three columns represent the following:
Current Position (left column) - Client's position prior to loan arrangement.
Proposed Position (centre column) - actual position if loan is approved.
Buffer Proposed Position (right column) - buffer (or stress) position.
Buffer calculations are applied as per organisation settings.
Buffer is there to test the deal for the scenario where interest rates are higher than current.
Each item can be clarified further with the tooltip popup (hoover mouse over light bulb icon of the item).
Rental expense
If rental expense is declared in Expenses tab, system will look at the Security tab to decide if these need to be included or not in the Proposed and Buffer expense fields.
If the Security is owner occupied, rental expense will be removed.
If Security purpose is investment, rental expense will be included in Proposed and Buffer expense fields.
Buffer Deficit
Negative buffer sum requires comments and broker understanding of potential impact on client's position.
Lender servicing might be positive while buffer position is negative. This might be normal but needs to be explained in servicing notes.
Comments
This table is kept for as long as deal is kept in the system and can be printed in compliance documents.
Completing this table and keeping comments is critical in proving responsible lending and (if required) best interest duty.
Verifications Completed
The purpose of this section is to record how client and deal items were verified. In a way it is a summary of diary entries related to the verification of clients.
This table can assist in any future fraud, responsible lending and best interest duty enquiries.
If more applicants are part of the deal, each applicant will have their own separate verifications table.
Click on client's name to switch between their tables.
Table has eight (8) components:
Verification of Identity (VOI/KYC) - Was client identity verification completed?
Interview details - Who, where and how conducted client interview.
Anti Money Laundering (AML) checks - Under AML3 brokers have some obligations in checking client background. Best to discuss with your compliance team.
Credit checks - Was there a credit check provided? E.g. Equifax.
Property searches - Was there a property search done via Pricefinder or RP Data?
Employment verification - How was employment verified. Select by clicking on checkboxes in a dropdown.
Income verification - How was income verified (e.g. bankstatements.com.au, CashDeck, Relie).
Living expense verification - Method of expense verification (e.g. bankstatements.com.au, CashDeck, Relie).
Statements and Disclosures
Risk Benefit Statements
When you select the Risk/Benefit Statements, they will be included in the 'Preliminary Assessment & Credit Proposal'.
It is of great importance in educating your clients during the credit assistance process so they can make an informed decision, including whether to apply for the product/s recommended with your assistance.
The Risk/Benefit Statements in Salestrekker2.0 cover the risks and benefits of the following loan features:
Basic variable rate loans
Fixed rate loans
Interest only loans
Introductory rate loans
Line of credit
Offset account facilities
Variable rate loans
Redraw
Broker Disclosure
Mandatory selection.
Confirm that the applicant(s) meet the recommended product’s Target Market Determination (TMD) criteria?
A Target Market Determination (TMD) is a document which describes who a product is appropriate for (target market), and any conditions around how the product can be distributed to consumers. By proceeding, you are attesting that you have confirmed: The relevant TMD exists (refer to the Lender Document Library); The relevant TMD is current; The applicant(s) meet all mandatory eligibility criteria
Are there any conflicts between any of the loan features marked 'Important'?
State any assessed conflicts between applicant's desired loan features. Note, these are not conflicts of interests, they refer to applicants product requirements
Confirm signed credit proposal/authority to proceed has been received from CLIENT
Confirm signed credit guide and privacy disclosure has been received from CLIENT
Credit guide and privacy proposal date
Confirm signed credit quote has been received from CLIENT
Compliance Documents
Mandatory selection.
Each client involved in the application will have a dedicated section for their compliance documents and confirmation of their signature.
Conflict of Interest Disclosure
Mandatory selection.
Was a conflict of interest identified at the time of assessment?
Product Suitability
Mandatory selection.
