Compliance for Asset Finance & Personal Loans Webinar 23 October 2018 FAQ s

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1 Compliance for Asset Finance & Personal Loans Webinar 23 October 2018 FAQ s General Questions Will a copy of this presentation / slides be sent out to all attendees? Yes. The slides have been uploaded to the Webinar under the Attachments tab for attendees to download during and at the end of the session. These will also be sent out to all attendees by attachment over the next weeks or so. The sound recording of the Webinar will be loaded into the Mercury WIKI by shortly after. Does the Webinar carry CPD points? If yes, how many? All attendees will receive 1 point for the hour Webinar. This will be automatically uploaded into your Mercury CPD record. Fees & Commissions Does the Origination fee need to be disclosed via a Credit Quote? No. The Origination fee and all other fees relating to a CAF loan / lease are disclosed in the contracts issued by lenders. The Credit Quote is only used for fees the broker needs / wants to charge for sourcing the loan (i.e. fees for service). Can you please advise what an appropriate origination fee and interest rate would be? Refer above. This is based on how the broker wants to dial up or down the origination / brokerage fee to arrive at the customer s interest rate. Of course, after 1 November 2018 ASIC s Flex Fee prohibitions come into force and the new requirements for setting interest rates and commissions will apply. To write an ANZ Personal Loan that has both an Origination fee and a Commission Fee, do I need to get a credit quote signed? No. These fees are charged within the Credit Contract. Any fees to be charged by you outside of the Credit Contract must be issued in a Credit Quote to the applicant/s. If the client agrees to be given an invoice by the broker for clawback of commissions where they refinance the loan/lease and that triggers a clawback, do I need to give the clients a Credit Quote when I provide credit assistance? No. There are no clawback issues with Asset Finance & Personal Loans. What is the bolt commission split that needs to come out of the commission? It s either 30% of total commissions or $385, whichever is greater. Total commissions equal Origination Fee + Commission from increasing the interest rate. What's the commission split for Asset and Personal Finance with Connective? If you go direct to the lender it s 100% of the upfront commission. Through BOLT, as per the above scale.

2 Why is the brokerage split different to total commission? These are different terminologies. Brokerage is commission & is a shared service fee with Notify (i.e. first $385). Interest Rates Is the rate determined when we don't know their credit score? It gets very costly doing a credit check on every client at $120 per person. The interest rate generated in the quote is based on the information selected for the primary applicant. You then dial up & dial down the brokerage which affects the interest rate quoted. However, when submitted to the lender through the system, the lender will complete the assessment and conduct a credit report to determine an interest rate. This is then manually entered into the details section in Mercury in order to issue a Preliminary Assessment & Credit Proposal Disclosure. What method do you recommend customers use to obtain their credit score? There are many Credit Assurance Providers through which consumers can obtain their credit score. Most charge a fee for this when consumers go direct, Equifax is one of these. If a broker has membership of one of these providers for accessing a client s credit file, the broker can provide the client details of their credit score. How do we know the credit score for pricing? The BOLT team do an Access Seeker check on your client s credit file prior to any submission. Would you still get the 4.95% rate setter rate as a renter or with parents? To qualify for the 4.95% at Rate Setter the client will have to be a property owner or put in a 10% deposit if a renter/boarder. Additionally, the age of the car can t be over 3 years old. If we delete the amount as a trade in or a deposit, does that still show the correct interest rate or do we have to proceed to application to be quoted the rate? Connective Charges $10 a report and gets expensive. Other aggregators only charge $4 - $6 dollars. I don't like to send them to other providers as you don t take them off the market. In the quote, the amount financed is the principal less any deposit or trade in plus fees (i.e. Establishment, Origination & Brokerage) that the rate is applied to. Remember that it's not Connective charging the fee for this service, but the Credit Enquiry Bureau. The agreement is between the broker & the Credit Bureau directly so the fee you are charged is the standard fee charged by the Credit Bureau to the broker. Bolt & Mercury What is the notepad for in Mercury? These are for the broker to make notes at any time and save in Mercury. How does Mercury sync the BOLT info? Mercury & Bolt don t sync. Therefore, you need to complete the Details, Contents, Notes, Needs Analysis / Questionnaire & Assets/Liabilities sections of the Mercury Opportunity so that this information can auto populate to the Preliminary Assessment and Credit Proposal Disclosure documents. Information loaded into Bolt does not sync into Mercury.

3 Are there plans to integrate BOLT information back into Mercury automatically? This and other updates to Bolt & Mercury are being looked at all the time. There is also the new asset finance aggregator 'Valiant' that s being added to Mercury and will enhance access to Commercial Asset Finance lenders. Look out for more details on this through Connective e-mag and other communications. Where can you adjust questionnaires for Asset Finance? The Needs Analysis & Questionnaire are formatted to deal specially with Asset Finance lending & Personal Loans. Can bolt do unsecured personal loans Yes. Is the Credit Guide the same as the home loans Credit Guide? It is based on the same format, but adapted for Asset Finance & Personal Loans. You can t use a Mortgage Credit Guide for Asset Finance or Personal Loans and need to select the Asset Finance or Personal Loan versions in the Document Wizard drop menu's. In the instance where Nodifi may the switch initially recommended lender based on better policy/ rate etc. Are we then required to make sure a new Credit Proposal is issued to the client? No. You prepare PA & CRP after obtaining the approval from the lender, therefore no changes will be required. Scott said that a credit proposal must be signed at application time for a personal loan but how is this possible if we don't know the figures until post submission and, in a recent case for me, post settlement? Refer to previous question & response. What if Nodify needs to take the deal to another lender? Do you have to complete another credit proposal for new lender? Refer to previous question & response. Is a Needs Analysis required if sending directly to Bolt via a simple tick and flick referral? As 'Tick & Flick' are simple referrals, the Responsible Lending Compliance processes & documents don t get completed as the lender contacts the client direct and undertakes the credit assistance discussions & compliance documentation. If this is unclear, contact your Connective CSM to discuss further. I am not sure if I missed the section on servicing, however I assume the servicing would be completed once the BOLT quotes have been obtained to ensure that the repayment amount can be serviced by the client? Yes. To clarify, if a self-employed husband is buying the car for wife and she only uses the car for 10% business, would this be a Consumer or Commercial (Loan Product)? The distinction of a purchase is to be recognised as a consumer or commercial asset finance deal is if the predominate purpose of the use of the asset is to be for commercial purposes i.e % or more.

4 Is it more difficult if it is private sale? No. The approval process is the same. The settlement process will differ as some lenders may require an inspection to take place. The inspection can delay the settlement by approx. 1-2 days. Is there online application forms Mercury connects with that will input this data automatically? No. You need to apply for a lenders product through Bolt. In relation to the vehicle 'Trade Low / Trade High' values, how accurate are these? These are based on the GLASSES Guide valuation tool which is a tool that lenders will use for valuation purposes. Most Lenders refer to the RETAIL value to determine the value of an asset. National Credit Code & Responsible Lending For Asset Finance lending & Personal Loans, are we required to have additional accreditation? Bolt caters for Asset Finance & Unsecured Personal Loans. To learn more about Asset Finance & Personal Loan processing & applications you should contact Phil Meehan to arrange to attend a CAF training session, or a one on one training by phone or skype session. Do we need to prepare a Fact Find? The Needs Analysis in Mercury must be completed in all cases. If a broker wants to use the paper based Fact Find, complete that with the customer and then upload the details into the Needs Analysis, that can be done as well. The Connective version of the paper formatted Fact Find is in the Documents tab in Mercury. Which fact find do we use? If you re in a Face to Face situation with the applicant you need to use the Asset Finance / Personal Loan Needs Analysis & Checklist in Mercury. If not Face to Face and using a paper Fact Find, the client is to complete & returns for broker to load into the Mercury Needs Analysis. Best to have a chat with your Compliance Support Manager and he/she can run through the Needs Analysis / Fact Find process with you. What's the purpose of the Preliminary Assessment if the client doesn't need it and I've got all the supporting proof in Mercury? The NCCP Act prescribes in the Responsible Lending rules that Credit Assistance Providers must assess whether loans are Not Unsuitable and in doing so must complete Preliminary Assessment's / Credit Proposal Disclosure / Credit Quote at the time of providing Credit Assistance. (Refer to Section 1of the Credit Guide for details on Preliminary Assessments). For personal loans if there are no comparisons how do you know which lender is offering the best product/rate? The rate is determined on the client credit score therefore it s difficult to provide an accurate interest rate in advance without knowing their Veda score. The issue here is also whether the loan is not unsuitable, not only whether it s the best. When it comes to Personal Loan s, it s primarily a solution based assessment. Interest rate may not be the primary consideration. It s best to discuss with the BOLT team or your Lender BDM for further understanding this concept. Does the broker have to offer three loan / lease options in the prelim assessment?

5 As there s no product comparisons for Asset Finance & Personal Loans, brokers must determine outcomes for the Responsible Lending requirements and record in Mercury and the loan submission how they have observed the NCC reasonable enquiries requirements to provide a loan that is not unsuitable. If I have a client overseas and they are not near a consulate/ high commission, can they go to a local agency (e.g. bank or post office) to get their id or documentation certified? All overseas resident / expat ID requirements must be discussed with the individual lender decided for the applicant s needs. Each has different policies to deal with this issue.