ASIC has released Report 330 Review of licensed credit assistance providers’ monitoring and supervision of credit representatives (REP 330) which looks at the processes of credit licensees for ensuring their representatives’ compliance when providing credit assistance for home loans (i.e. mortgage broking).
ASIC reviewed 18 credit licensees who had a total of 9,869 credit representatives, approximately 40% of all credit representatives notified to ASIC as at 1 October 2011.
The review’s 8 recommendations are:
- Credit licensees’ compliance and training documents should be specifically tailored to reflect the nature, scale and complexity of a licensee’s particular business;
- Credit licensees should have appropriate practices and procedures in place not only to ensure that their credit representatives are appropriately qualified, initially, to be appointed as a credit representative, but also to ensure that they remain appropriately qualified on an ongoing basis;
- Credit licensees should have appropriate practices and procedures in place to be able to directly provide consumers with a copy of the preliminary assessment, if requested to do so, within the timeframe prescribed by legislation;
- Credit licensees should be able to identify all instances of credit assistance provided by each of their credit representatives, including where credit is not ultimately provided, with best practice being able to also identify the volume of loans from each credit representative by other potential risk indicators (e.g. loan type or loan purpose);
- Credit licensees should have appropriate practices and procedures in place to undertake compliance reviews of their credit representatives;
- When reviewing credit representatives’ compliance with the responsible lending obligations, credit licensees should assess the credit assistance provided against their own responsible lending policies, rather than only checking whether an application meets the credit provider’s guidelines;
- Credit licensees should have processes in place not only to address specific compliance issues with individual credit representatives, but also to identify and address potential systemic compliance issues through regular updates to their training material, compliance plans and risk management systems;
- Credit licensees should have processes in place not only to address the causes of specific compliance issues with their credit representatives, but also to identify and rectify consumer detriment arising from those compliance issues.
