FNS40815 FNSCRD301 Assessment 1 Knowledge

This document is Assessment 1 - Knowledge for FNS40815 Certificate IV in Finance & Mortgage Broking. It covers the understanding of different credit products and their application requirements. It also discusses the types of credit available in Australia, costs associated with credit, debt collectors, financial service provider's credit assessment policy, and the National Credit Code.

FNS40815 Certificate IV in FINANCE & MORTGAGE
BROKING
FNSCRD301 Process applications for credit
Assessment 1 - Knowledge
FNS40815_ FNSCRD301 Assessment 1 Knowledge Document Owner: Released September 2024
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Activity 1
Refer to your Learner Guide and the guide ‘Money Smart - Types of Credit’,
located in the Additional Resources folder and respond to the following:
Your supervisor has asked you to provide information to clients about different
credit products.
Compete the table below to demonstrate to your supervisor your understanding
of credit products and their application.
(List the features of credit products and their application requirements)
Activity 1 Answer
Type of Credit Explanation Advice that you should provide to
the client about the product
Car loan Car loan is the loan which
allows paying for the vehicle
when the Individual is not
able to pay.
Advice provided to the client is that
before purchasing the desired car,
individual should ensure full
information about the product.
Personal loans Personal loans are the loans
which are used for the
variety of purposes offered
by the online lenders, credit
unions etc.
Advice provided to the client is that
personal loans should be taken for the
fulfilment of needs and requirements.
Credit cards Credit card is the card from
which the individual pays
the money or make
transactions (Awoyemi and
et.al., 2017).
Advice provided to the client about
the product is that the product should
be bought with the help of credit card
which helps in making easy
transactions.
Consolidation
loan
Consolidation loan is the
personal loan which is used
to pay off the existing debt.
Advice provided to the client about
the consolidation loan is that the debt
balance should be incurred effectively
by the client.
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Activity 2
Refer to your Learner Guide and the guide ‘Money Smart - Types of Credit’,
located in the Additional Resources folder and respond to the following:
You have asked the following questions to check a client’s level of understanding
and knowledge regarding credit application processes:
 What types of credit are available in Australia?
 Do you know the costs associated with credit?
 Do you know what a debt collector is?
Now complete the table below by describinghow you can assist the special needs
and requirements of a client according to the level of knowledge and
understanding they have demonstrated when answering the above questions.
(Identify ways of obtaining and checking relevant information from applicants)
Activity 2 Answer
Level of Understanding Description of action or assistance that
should be provided
Level 1: No or a limited
understanding
The limited understanding is known about the
debt collector. The assistance that should be
provided regarding the credit application
about the debt collector is that the balance
should be checked appropriately.
Level 2: Some level of
understanding
The cost associated with credit has some level
of understanding which denotes that the
assistance should be provided to the client
regarding the information.
Level 3: A higher level of
understanding
The higher level of understanding is of the
types of credit which are available in Australia
in which the action should be taken is to gain
more information about the credit application
processes (Hara and et.al., 2018).
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Activity 3
Explain the key features of a financial services provider’s credit assessment
policy based on the principles of responsible lending.
(Explain key features of organisational policy and procedures that relate to credit
assessments, security and customer service)
Activity 3 Answer
Financial service provider is the business offering financial advice or
intermediary advice and the representatives who work for providing the
services which are financial in terms and helps the clients to measure the most
effective ways of how to make the financial transactions to be made available
to the clients and the customers in the most effective way possible. The key
features of financial service provider’s credit assessment policy are the main
thing which the customers should be aware of (Rai and et.al., 2020). This makes the
most of the process of how the transactions are taken place and what are the
key features in which the transactions are done. Responsibly leading the way
through which the financial service provider’s credit assessment policy is
initiated is based on how the finance is being handled in the business and how
the credits are being managed by the customers.
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Activity 4
The purpose of the National Credit Code is to provide protection for consumers
who enter into credit contracts for personal purposes. How does the legislation
identify whether a loan is for personal purposes, as opposed to business
purposes?
(Explain the key purpose of relevant credit legislation, statutory requirements
and codes of practice, covering: consumer credit; personal property securities;
privacy)
Activity 4 Answer
National Credit Code is the process which regulates all consumers lending
which includes residential investment and the property by non corporate
borrowers. This is basically done for personal purposes and by making this
initiative the customers are aware of how and what are the financial
transactions which are being done in the process. This makes the national
credit code the most effective process for the transactions and for the purpose
of what is to be done regarding the credits which are made available to the
customers (Memorandum, 2019).This also helps in entering the credit contracts
and for personal loans which are made. The loan identifies whether it is of
personal purpose or for business purpose is that the customers identify what is
the source and what is the means of how the transaction is being done.
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Activity 5
When taking out a business loan a lender will often want to secure the loan in the
form of an asset. This security is intended to minimise risk exposure in the event
the applicant is unable to repay the loan.
Describe the main types of ‘security’ that may be required to obtain a small
business loan.
(Explain types of security)
Activity 5 Answer
The types of security which may be required to obtain a small business loan
are – secured term loan, financing which is based on assets, invoice
discounting, letter of credit etc. These are the types of security loans which
are refereed for the purpose of how the small businesses incur the most of
the transactions which are done effectively on large basis. The security in
small business is essential part in the business which makes the most of the
work and this initiate and makes the profitable business earnings through
which the business is able to take the loans and then pay back with the
interest on small basis (Biira, 2021). This is the major source through which the
business will be initiating the major parts of how the security is to be
ensured to safeguard the business and to make it reach on the scales of
profits and losses.
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REFERENCES
Books and Journals
Awoyemi, J.O. and et.al., 2017, October. Credit card fraud detection using machine learning
techniques: A comparative analysis. In 2017 International Conference on Computing
Networking and Informatics (ICCNI) (pp. 1-9). IEEE.
Hara and et.al., 2018. "Secured Transactions Law Reform in Japan: Japan Business Credit Project
Assessment of Interviews and Tentative Policy Proposals." Secured Transactions Law Reform
in Japan: Japan Business Credit Project Assessment of Interviews and Tentative Policy
Proposals (April 5, 2021). U of Penn, Inst for Law & Econ Research Paper 21-16 (2021).
Rai, R. and et.al., 2020, September. Institutionalizing Paradox: Contextual Ambidexterity in an
Oligopolistic Setting: The Case of a Financial Service Provider. In European Conference on
Innovation and Entrepreneurship (pp. 513-520). Academic Conferences International
Limited.
Memorandum, P.U.M.A., 3.7, 2019. CREDIT ENHANCEMENT. Commercial Law Aspects of
Residential Mortgage Securitisation in Australia.p.56.
Biira, F.J., 2021. Assessment of factors associated with access to credit “loans” For small and medium
business enterprises.
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