Admin vs Credit Activities – are your staff crossing the line?

May 21st, 2018

We’ve said it before – support staff are the unsung heroes of every mortgage broking business. They take care of all the paperwork and daily admin tasks, freeing up your time so you can focus on servicing more clients, writing more loans and growing your bottom line.

But are they taking on tasks that may be considered ‘credit activities’? If you answered that question with a ‘yes’ or even ‘I don’t know’ you could be exposing your business to a compliance risk.

What’s the issue?

Administration staff are not permitted to engage in tasks that may be considered credit activities. The NCCP Act requires that any person engaging in credit activities must hold an Australian Credit License (ACL) or be authorised as a Credit Representative of an ACL holder.

A breach of the NCCP Act can carry some serious civil and criminal penalties. That means you must not allow anyone to carry out a task that may be considered a ‘credit activity’ unless they are appropriately authorised to do so. This rule not only applies to all employees, it also applies to all sub-contractors, agents, consultants and advisers who are in any way involved with your business.

So, what activities are considered ‘credit activities’?

The reason this is an issue in many mortgage brokerages is because ‘credit activities’ is such a general term. You could argue that everyone who works for a mortgage brokerage is involved in credit activities at some level.

For clarification, let’s look at the actual rule – Section 8 of the NCCP Act. This is where it specifies that the person providing ‘credit assistance’ to a consumer is properly qualified to do so. Regarding the definition of what activities are credit activities, it says:

A person provides ‘credit assistance’ to a consumer if, by dealing directly or indirectly with a consumer in the course of, as part of, or incidentally to, a business carried on this jurisdiction by the person, the person:

1. suggests and/or assists the consumer apply for a particular credit contract with a particular credit provider; or
2. suggests and/or assists the consumer apply for an increase to the credit limit of a particular credit contract with a particular lender; or
3. suggest that the consumer remain in a particular credit contract with a particular credit provider
4. suggests and/or assists the consumer apply for a particular consumer lease with a particular lessor; or
5. suggests that the consumer remain in a particular consumer lease with a particular lessor.

The key word here is “suggests” – problems may arise when members of your staff who are not Credit Representatives are talking to customers or potential customers. If a customer asks a question, your staff may be at risk of stepping over the line by providing an answer if it relates to any of the five points above.

In fact, it could be construed that your staff are providing ‘credit assistance’ or getting involved with ‘credit activities’ if they say or do anything at all that influences or assists the customer to make a decision on a loan (or lease) with a specific lender, increase their credit limit, or stay with their current loan or lease.

This may prove a bit difficult for those who assist with sales, answering phones and customer enquiries, or with providing simple day-to-day customer service. Today’s customers want fast answers – they don’t like to wait to speak to a mortgage broker to get a question answered or to ask for advice.

Give your support staff the right title

It’s important that you give your staff the right title for the function they perform, so your customers are not confused. For example, the title ‘loan writer’ or ‘mortgage broker’ refers to someone who facilitates the end to end loan process and implies someone who is authorised to give credit assistance.

Here’s some industry suggestions that will place your support staff in the right context for your customers and help to avoid ambiguity: Admin Support Assistant, Loan Processing Officer, Loan Admin Assistant. These titles emphasise that your employee is only a facilitator – which will help prevent customers asking them to provide answers to questions which may be construed as ‘credit assistance’ or ‘credit advice’.

If you need help giving your support staff member the correct title, contact the Compliance Team and we’ll be happy to help.

Submitting loan applications

Another area where support and administration staff may accidentally cross the line is with the submission of loan applications.

Many brokers use support staff to help with the loan application, performing tasks like follow-up calls, collecting up documents from customers and checking that everything is correct. This is OK up to a point – however, it’s the responsibility of the person providing the credit assistance to ensure that the information provided is correct. So, you should always check the loan application carefully yourself and verify that everything is in order before you submit it to a lender.

There is one more very important thing about submitting loan applications that all ACL holders and Credit Representatives must remember:

The person providing credit assistance to a consumer, must be the same person who submits that consumer’s loan application to the lender.

That means you must always lodge the application yourself using your individual broker code – do not ask someone else to do it. Most importantly, do not give your broker code to someone else so they can do it for you!

If you need help determining if your admin staff are crossing the ‘credit activity’ line, just get in touch with your local Compliance Support Manager. You can contact us by clicking the Help icon in Mercury and then selecting Compliance from the menu, or you can get in touch by emailing our Compliance Helpdesk directly at compliance@connective.com.au

We’re always happy to help!