Having sound compliance processes in place not only helps ensure good customer outcomes, but it also helps protect your businesses by avoiding loss of lender accreditations, avoiding reportable situations to ASIC, and strengthening their position should they receive a complaint.
At our recent audit feedback sessions, we identified some of the most common compliance issues brokers get caught out by, most of which are particularly easy for you to correct.
1. Correct commission disclosures
Name of the Other Party receiving commission not shown on the Credit Proposal. This can be avoided by ensuring they check the Other Parties Being Remunerated field (Loan Summary tab) is correct/completed, prior to generating the Credit Proposal.
Further info on commission disclosures can be found here on Help.
2. Reaching retirement age during the loan term
This should be captured with the foreseeable changes in the Flex Opportunity, so it is included on the Credit Proposal PCA. If they do not, the Credit Proposal PCA will state (below the R&O’s on page 3) the client confirms they will not be retiring before the end of the loan term. Audits often identify this is at odds with the retirement age/plans, noted on the application and supporting documents.
3. Approved Electronic Signatures on compliance documents and AFG Privacy Consent
DocuSign, HelloSign and Adobe E Sign are the only approved formats, and the audit trail document/certificate needs to be on file. Further info on E Signatures can be found here on Help.
4. All documents are to be provided for the audit.
The audit aims to review all steps taken by brokers to meet their own obligations, not only what was sent to the lender to meet their requirements.
It’s important that they double check all documents have successfully uploaded to Flex as we are unable to consider any missing documents once the audit commences. We also encourage brokers to upload all documents at the time of application, to reduce the time taken when they receive the audit request.
Further info on uploading to Flex can be found here on Help.
5. Refinances - Total Interest Calculations
It’s important these calculations are performed to ensure they are acting in the client’s best interests. We have made available the Debt Cons. & Refinance Calculator (Excel) and the Advanced Modelling feature in Flex. They are not restricted to the use of these calculators only however, whatever calculations they do need to be on file.
Further info on this and the calculator can be found here on Help.
And lastly...
If you require further information on these issues or any other compliance questions, don’t hesitate to contact AFG’s Compliance Team by emailing compliance@afgonline.com.au.
