Are your staff involved in credit activities?

July 17th, 2017

Are your staff involved in credit activities?

Support staff are the unsung heroes of every mortgage broking business. Sometimes it’s your life-partner clearing the way for you to focus on servicing your clients and writing more loans, by burning the midnight oil doing your books. But in many brokerages, there’s often a small group of indispensable folk backing you up in ways you may not even notice.

The question is: 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?

If a person engages in credit activities that are regulated under the NCCP Act, they 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 your staff must not be involved with ‘credit activities’ unless they are appropriately authorised to do so. This does not only apply to your office staff and life-partner. This rule applies to all employees, sub-contractors, agents, consultants and advisers who are in any way involved with, or help you to operate, your business.

What activities are ‘credit activities’?

‘Credit activities’ is a very general term. It’s important that the person providing ‘credit assistance’ to a consumer is properly qualified to do so. This is defined in Section 8 of the NCCP Act as follows:

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 providers
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.

According to this definition, problems may arise when members of your staff, or other people associated with your business, are talking to customers or potential customers. They may be considered to be providing ‘credit assistance’ or getting involved with ‘credit activities’ if they say or do anything that influences or assists anyone to take 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 you with selling your services, answering phones and customer enquiries, or with providing simple day-to-day customer service. Frequently, the customer won’t want to wait to speak to a mortgage broker to get a question answered or to ask for advice about this or that. If your staff member knows the answer to the customer’s question, they could cross the line just by being helpful.

One other issue – submitting loan applications.

Another area where staff members may accidentally cross the line is with the submission of loan applications. Many brokers use support staff to help ensure that everything is in order for the loan application, performing tasks like follow-up calls, collecting up documents from customers and checking that everything is correct. This is all well and good, however there is one 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 lodge the application yourself using your individual broker code – do not ask someone else to do it. You should also verify everything in the loan application is correct yourself, especially if you have asked a staff member to help you get it together.

If you need help determining if your 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!