In recent years, the law surrounding home loans and other kinds of credit has been revised and much stricter rules were imposed on mortgage lending. You may have heard about the NCCP (National Consumer Credit Protection Act 2009) in the media since then – but do you know what it means for you? This article outlines what the NCCP does and how it benefits you as a borrower.
The NCCP is legislation (now in law) that is designed to protect you and ensure that there are ethical and professional standards in the finance industry. To enforce these standards, the NCCP requires all lenders and mortgage brokers to hold a credit license or to be registered as an authorised credit representative of a credit license holder.
The authority that enforces these rules for lenders and mortgage brokers is called the Australian Securities and Investments Commission – also known as ASIC. ASIC regularly audits lenders and mortgage brokers to ensure we are adhering to the rules set out in the NCCP.
You can rest assured that we strictly adhere to the professional standards outlined in the NCCP. We are strong advocates of high standards of ethics in mortgage broking and the finance industry, so you can rely on us to give you very professional support and advice on your mortgage and other credit needs.
Regulating how we do business with you
When you apply for a mortgage through us, we are required to follow a specific process under the rules of the NCCP, to ensure you get the very best result. In fact, the NCCP has an entire chapter devoted to the concept of “Responsible Lending”. In order to be sure that we are being responsible when suggesting mortgage products to you, the NCCP requires us to:
1. Make enquiries into your financial position, requirements & objectives.
2. Verify your financial position.
3. Make a preliminary assessment using the information gathered in steps 1 & 2, about what loan types are appropriate and suitable before recommending them to you.
What makes a loan product ‘unsuitable’?
In order to protect your interests, the NCCP requires us to take every step we can to ensure you get the best possible product and rate for your needs. To help make sure this happens, the NCCP Act defines situations where a contract or product will be unsuitable, to include where:
➢ You may be unable to meet the loan repayments, or may only be able to meet them with substantial hardship; or
➢ The loan does not meet your requirements or objectives.
These rules are the reason why we spend so much time and effort getting to know you and your financial position before we start organising or enquiring into loans. In order to behave responsibly and make a reasonable assessment about whether or not a loan product is suitable for you, we need to fully understand your personal circumstances and financial position.
We often receive enquiries from people who would just like to know the best interest rate available today. Unfortunately, the rules of NCCP mean that giving such a quote would be irresponsible – and most likely inaccurate. It’s not until we’ve made enquiries into your personal circumstances and financial position that we can put together a selection of appropriate loans and help you choose the most advantageous interest rate from amongst them.
Documentation we must provide to you
Under the rules of the NCCP, we are required to provide you with comprehensive information as soon as it becomes apparent that we are likely to do business with you. That’s why our Credit Guide sets out important information about us and the services we provide to you as your broker. It outlines the information we will need from you in order to make the preliminary assessment described above. It also tells you what to do if you have a complaint and how to go about getting it heard and resolved.
Additionally, if you would like a copy of our preliminary assessment (and we haven’t given it to you already), you can request that we give you a copy at any time.
Talk to us, we’re the professionals you can rely on!
As your mortgage broker, we aim to provide you with truly professional assistance in your financing needs. With the highest ethical standards in place, you can rely on us to help you get the right home loan for your personal circumstances and financial goals.
If you’d like to find out more about how ASIC regulates lenders and mortgage brokers, you can visit their website here. If you’d like to find out more about the NCCP, you can download a copy here. Of course, if you have any questions or you’d just like to talk about your rights as a borrower, we’ll be happy to help – just give us a call today.