Responsible Lending and Best Interests Policy

Purpose. This policy sets the standards brokers and credit analysts must meet when assisting a consumer with credit, so that every recommendation is in the client's best interests and every loan is not unsuitable under the National Consumer Credit Protection Act 2009.

1.Scope

This policy applies to every credit representative, broker, credit analyst and support staff member involved in credit assistance for consumer loans, and by the firm's choice to commercial and equipment finance as well. It must be read with the Loan Application Procedure and the Needs Analysis and Preliminary Assessment Template.

2.Best interests duty

Brokers must act in the best interests of the client when providing credit assistance and must prioritise the client's interests over their own and the firm's where there is a conflict. A recommendation must be based on the client's needs, objectives and financial situation and on a reasonable investigation of products available on the firm's panel. Where a product outside the panel would clearly serve the client better, the broker must tell the client.

3.Reasonable inquiries and verification

Brokers must make reasonable inquiries about the client's requirements and objectives, income, expenses, assets, liabilities and foreseeable changes, and must verify income and expenses from documents such as payslips, tax returns, bank statements and account transaction histories. Declared living expenses must be compared with bank statements and the higher figure used where they differ.

• Requirements and objectives recorded in the client's words
• Income verified from payslips, returns or financials
• Expenses verified from three months of statements
• Liabilities verified from statements and credit report
• Foreseeable changes such as retirement, parental leave or reduced hours recorded

4.Preliminary assessment

A preliminary assessment must be completed and dated before credit assistance is provided and must record why the loan is not unsuitable. The assessment must be given to the client on request within seven years. Interest-only, high loan to value, guarantor and debt consolidation loans require additional documented reasoning.

5.Conflicts and remuneration

Brokers must disclose commission and any ownership or referral relationship in the credit guide and credit proposal. Brokers must not recommend a lender or product because of higher commission, volume bonuses or soft-dollar benefits. Any gift over 100 dollars from a lender must be recorded in the Conflicts of Interest and Gifts Register.

6.Review and supervision

Every file must be reviewed by a second person before submission. The Head of Broking will sample at least ten per cent of files each quarter and the Compliance Manager will record the results. Breaches of this policy must be reported under the breach reporting process and will be treated as serious.