Case Study 1: Philip and Jennifer Brown

This case study focuses on Philip and Jennifer Brown, a young couple looking to buy their first home. It includes details about the property they are interested in, their financial and employment information, and their loan requirements.

Written Assignment
Certificate IV in Finance and Mortgage Broking
(CIVMB_AS_v4A1)
Student identification (student to complete)
Please complete the fields shaded grey.
Student number 10646951
Written assignment result (assessor to complete)
Result — first submission (Details for each activity are shown in the table below)
Not yet competent
Parts that must be resubmitted:
All tasks except 14.
Result — resubmission (if applicable)
Not Yet Competent
Tasks 1, 2.1, 2.2b, 3, 5, 9.3, 9.4, 12.2
CIVMB_AS_v4A1

Result summary (assessor to complete)
First submission Resubmission (if required)
Section 1: Case study 1 —
Philip and Jennifer Brown
Task 1 — Gathering and documenting client information Not yet demonstrated Not yet demonstrated
Task 2 — Assessing the clients’ situation Not yet demonstrated Not yet demonstrated
Task 3 — Borrowing options Not yet demonstrated Not yet demonstrated
Task 4 — Reasonable enquiries Not yet demonstrated Demonstrated
Task 5 — First Home Owners Grant Not yet demonstrated Not yet demonstrated
Task 6 — Philip and Jennifer’s professional network Not yet demonstrated Demonstrated
Task 7 — Interest rates Not yet demonstrated Demonstrated
Section 2: Case study 2 —
Richard and Pauline Jackson
Task 8 — Establishing level of financial knowledge Not yet demonstrated Demonstrated
Task 9 — Responsible lending obligations Not yet demonstrated Not yet demonstrated
Task 10 — Self Employed special considerations Not yet demonstrated Demonstrated
Task 11 — Advising on strategies Not yet demonstrated Demonstrated
Task 12 — Impact of credit history Not yet demonstrated Not yet demonstrated
Task 13 — External dispute resolution Not yet demonstrated Demonstrated
Task 14 — Effective access to files Demonstrated Demonstrated
Feedback (assessor to complete)
An average first attempt at assignment.
You did not render the assignment in its correct format however I have copied your responses into the
correct document. Do not erase any of the content when you resubmit.
Majority of the Tasks require further work. Please be guided by my comments at each task and refer to
the self study material for reference.
Several of your responses were too brief to demonstrate competency while other responses did not
appear to relate to the question being asked. This is a Certificate IV level course and expectation is that
you are able to provide appropriate commentary to demonstrate your knowledge. While word counts,
where provided, are a suggestion only they do give some indication of the level of detail expected for a
particular response.
(Please keep your original answers and record your re-submission answers in a different colour.)
You have been unsuccessful in your re- submission attempt based on overall
completion of your re-submission tasks and not strictly following assessors
comments. These incorrect tasks are very important to get right as a mortgage
broker and you need to ensure that you are better equipped with content. Please be
guided by the feedback provided for each of the Tasks 1, 2.1, 2.2b, 3, 5, 9.3, 9.4, 12.2
and refer to the self-study material for reference
(Please keep your original answers and record your re-submission answers in a different colour.)
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Before you begin
Read everything in this document before you start your assignment for Certificate IV in Finance and
Mortgage Broking (CIVMB_AS_v4A1).
About this document
This document is the written assignment — half of the overall Written and Oral Assignment.
This document includes the following parts:
• Instructions for completing and submitting this assignment
• Section 1: Case study 1 — Philip and Jennifer Brown
A case study with a series of short-answer questions:
– Task 1 — Gathering and documenting client information
– Task 2 — Assessing the clients’ situation
– Task 3 — Borrowing Options
– Task 4 — Reasonable enquiries
– Task 5 — First Home Owners Grant
– Task 6 —Philip and Jennifer’s professional network
– Task 7 — Interest rates
• Section 2: Case study 2 — Richard and Pauline Jackson
A case study and a series of short-answer questions:
– Task 8 — Establishing level of financial knowledge
– Task 9 — Responsible lending obligations
– Task 10 — Self Employed special considerations
– Task 11 — Advising on strategies
– Task 12 — Impact of credit history
– Task 13 — External dispute resolution
– Task 14 — Effective access to files
• Appendix 1: Client information collection tool/Fact Finder.
How to use the study plan
We recommend that you use the study plan for this subject to help you manage your time to complete
the assignment within your enrolment period. Your study plan is in the KapLearn Certificate IV in
Finance and Mortgage Broking (CIVMBv4) subject room.
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Instructions for completing and submitting this written
assignment
Saving your work
Download this document to your desktop, type your answers in the spaces provided and save your work
regularly.
• Use the template provided, as other formats will not be accepted for these assignments.
• Name your file as follows: Studentnumber_SubjectCode_Submissionnumber
(e.g. 12345678_CIVMB_Submission1).
• Include your student ID on the first page of the assignment.
Before you submit your work, please do a spell check and proofread your work to ensure that everything is
clear and unambiguous.
Word count
The word count shown with each question is indicative only. You will not be penalised for exceeding the
suggested word count. Please do not include additional information which is outside the scope of the
question.
Additional research
When completing the Client Information Collection Tool in Appendix 1, assumptions are permitted,
although they must not be in conflict with the information provided in the Case Study.
You may also be required to source additional information from other organisations in the finance industry
to find the right products or services to meet your client’s requirements or to calculate any service fees that
may be applicable.
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Submitting the written assignment
Only Microsoft Office compatible written assignments submitted in the template file will be accepted for
marking by Kaplan Professional Education. You need to save and submit this entire document.
Do not remove any sections of the document.
Do not save your completed assignment as a PDF.
The written assignment must be completed before submitting it to Kaplan Professional Education.
Incomplete written assignments will be returned to you unmarked.
When you submit your written and oral assignment in KapLearn, the File submissions box will list the
maximum size for new files and the maximum number of attachments.
Once you submit your written assignment for marking you will be unable to make any further changes to it.
You are able to submit your written assignment earlier than the deadline if you are confident you have
completed all parts and have prepared a quality submission.
Please refer to the Assignment submission/resubmission instructions (pdf) in the Assessment section of
KapLearn for details on how to submit your written assignment.
Your Written Assignment and Oral Assignment must be submitted together on or before your due date.
Please check KapLearn for the due date.
The assignment marking process
You have 26 weeks from the date of your enrolment in this subject to submit your completed assignment.
If you reach the end of your initial enrolment period and have been deemed Not Yet Competent in one or
more assessment items, then an additional 4 weeks will be granted, provided you attempted all assessment
tasks during the initial enrolment period.
Your assessor will mark your written and oral assignment and return it to you in the Certificate IV in
Finance and Mortgage Broking (CIVMBv4) subject room in KapLearn under the ‘Assessment’ tab.
Make a reasonable attempt
You must demonstrate that you have made a reasonable attempt to answer all of the questions in
your assignment. Failure to do so will mean that your assignment will not be accepted for marking;
therefore you will not receive the benefit of feedback on your submission.
If you do not meet these requirements, you will be notified. You will then have until your submission
deadline to submit your completed assignment.
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How your written assignment is graded
Assignment tasks are used to determine your ‘competence’ in demonstrating the required knowledge
and/or skills for each subject. As a result, you will be graded as either competent or not yet competent.
Your assessor will follow the below process when marking your assignment:
• Assess your responses to each question, and sub-parts if applicable, and then determine whether you
have demonstrated competence in each question.
• Determine if, on a holistic basis, your responses to the questions have demonstrated overall
competence.
You must be deemed competent in all assessment items in order to be awarded your qualification,
including demonstrating competency in:
• all of the exam questions
• the written and oral assignment.
‘Not yet competent’ and resubmissions
Should sections of your assignment be marked as ‘not yet competent’ you will be given an additional
opportunity to amend your responses so that you can demonstrate your competency to the required level.
You must address the assessor’s feedback in your amended responses. You only need amend those sections
where the assessor has determined you are ‘not yet competent’.
Make changes to your original submission. Use a different text colour for your resubmission. Your assessor
will be in a better position to gauge the quality and nature of your changes. Ensure you leave your first
assessor’s comments in your assignment, so your second assessor can see the instructions that were
originally provided for you. Do not change any comments made by a Kaplan assessor.
Units of competency
This written assignment is your opportunity to demonstrate your competency against these units:
FNSCRD301 Process applications for credit
FNSFMB401 Prepare a loan application on behalf of finance or mortgage broking clients
FNSFMB402 Identify client needs for broking services
FNSFMB403 Present broking options to client
FNSFMK505 Comply with financial services legislation and industry codes of practice
FNSINC401 Apply principles of professional practice to work in the financial services industry
FNSINC402 Develop and maintain in-depth knowledge of products and services used by an organisation or sector
BSBITU306 Design and produce business documents
BSBCUS301 Deliver and monitor a services to customers
BSBCUS402 Address customer needs
FNSSAM403 Prospect for new clients
FNSFMB501 Settle applications and loan arrangements in the finance and mortgage broking industry
Note that the Written and Oral Assignment is one of two assessments required to meet the requirements
of the units of competency.
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We are here to help
If you have any questions about this written assignment you can post your query at the ‘Ask your Tutor’
forum in your subject room. You can expect an answer within 24 hours of your posting from one of our
technical advisers or student support staff.
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Section 1: Case study 1 — Philip and Jennifer Brown
Background
Philip and Jennifer Brown are a young couple about to buy their first home. They have been married for
five years and during that time have rented an apartment while saving for their own home.
Following a personal referral from Glenn Brown, Philip’s brother you have already had a first meeting with
Philip and Jennifer to discuss their objectives and needs. They admitted they have little time to do much
research of lenders, have limited knowledge of the loan products available and have approached you to
guide them through the process as they are confused.
During (and subsequent) to your first meeting, Philip and Jennifer have provided the basic information
documents — pay slips, tax returns, bank statements, property details for review/verification. You have
now undertaken your preliminary assessment and need to discuss and present to them the proposal
covering the options and your recommendations. It is important to get the proposal moving quickly,
as the agent has indicated other parties are interested in the property.
They have been looking at properties for the past three months and have found a 10 year old established
apartment that has really caught their eye, although they have some concern over the kitchen which
requires some minor renovations.
They have not paid a deposit at this stage, but the Real Estate Agent has provided some guidance on
additional fees and charges.
Following is a summary of the details of the property they wish to purchase, the couple’s financial and
employment details, and the loan features they require.
The property
Address Unit 1, 92 Seaside Lane Edgartown (Your state)
Purchase price $490,000
Description 2 bedroom, 2 bathroom Strata Title apartment
Agent details Stephanie Jones
Phone [phone]
Mobile [phone]
The couple
Current address Unit 12, 22 Wentworth Lane, Highville, (Your state)
Philip and Jennifer have lived there since March 2012
Home phone [phone]
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Funds position
Purchase price $490,000
Clients’ estimate of costs $25,000
Total required $515,000
Loan $440,000 + LMI
Clients’ total contribution $75,000
Use fees and charges applicable to your state. If a servicing calculator you are using requires a postcode,
select one that would represent a reasonable suburb/location in your city or state.
Assets
Capital Bank savings account (joint) $78,000
Capital Bank cheque account (joint) $1600
Holden Commodore SS 2007 (Philip) $25,000
Kia Cerato Sport 2015 (Jennifer) $9000
Superannuation — Capital Bank (Philip) $28,000
Superannuation — Capital Bank (Jennifer) $62,000
Household effects (insured value) $40,000
Liabilities
Capital Bank personal loan (Philip) $5,600 (repayments $180 p.m.)
Capital Bank Visa card (Philip) $200 (limit $4,000)
Capital Bank Visa card (Jennifer) $1,600 (limit $5,000)
Payments have always been met on time and any prior loans repaid in terms of contracts. The minimum
monthly commitment on each of the credit cards should be calculated at 3% of the credit limit.
Living expenses
Annual expenditure for living expenses — $33,000.
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Employment and income
Philip (date of birth 21/2/87)
Position Team Leader (full time)
Employer ACE Limited 101 City Rd, Westside (Your state)
Phone [phone]
Income (gross) $58,000 p.a. monthly gross income: $4,833
Employer contact Dwayne Johnson, HR Manager
Length of service Since October 2005
Driver’s licence 8855KL
Email [e-mail]
Jennifer (date of birth 8/10/88)
Position Accountant (full time)
Employer Tech city 804 High Street, City East (Your state)
Phone [phone]
Income (gross) $95,000 p.a. monthly gross income: $7,917
Employer contact Bruce Wayne, HR Manager
Length of service Since March 2006
Driver’s licence 17016C
Email [e-mail]
Solicitor’s details
Jones and Co
22 High Street, City East (Your state)
Phone: [phone]
Email: jonesandco.net.au
The solicitor has quoted a fee of $1,500 for the conveyance.
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The loan requirements
• 30 year term
• Premium option home loan features
• Variable interest rate (for this case use 4.5% p.a.)
• LMI to be capitalized
• proposed settlement date — six weeks from exchange of contracts
• Ability to make additional payments from time to time without penalty
• Fortnightly repayment option
• Redraw facility
• Funds access via card.
Other information
• Jennifer has asked if there are any professional package benefits available because she is an accountant.
• Jennifer previously owned and lived in an apartment with her two older sisters when they attended
university but they sold this before she married — they did not make a lot from sale.
• Family plans are five years away.
• They do have plans to take a major overseas trip before family comes along.
• Philip is hoping for a promotion within the next 12 months upon possible retirement of a long-term
employee where he works.
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Assignment tasks (student to complete)
Task 1 — Gathering and documenting client information
Complete the Client Information Collection Tool (located at the end of the assignment in Appendix 1)
using the information provided in Case Study 1.
Note: Any assumptions you make should be listed and should not be in conflict with the case study
information already provided.
Surname Applicant 1 Applicant 2
Philips Brown Jennifer Brown
Other names Brown Brown
Contact details
Address
Phone (W)
Phone (H)
Mobile
Email
Unit 12,22 Wentworth Lane,
Highville
98001111 99102033
91232121 91232121
[e-mail] ;
Jbrow@techcity,com.au
Unit 12,22 Wentworth Lane,
Highville
Employment Accountant Team Leader Accountant
How long 12 years 13 years
Employment type Full time Full time
Gross income $58,000 $ 95,0000
Number of
dependants
1 1
Motor vehicle Yes Yes
Loan Purpose To buy their own house To buy their own house
Purchase price $490000
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Deposit on
property Deposit on property = $50000
This is not the deposit amount –
this is the total contribution
toward the proposal
Loan amount
Loan Amount = $447,744
Borrowing capacity
(using Genworth
serviceability
calculation)
$ 850,000 (this amount appears a bit low
based on case study facts)
Not completed
Note: Any assumption you make should not conflict with the case study should not conflict with the case
study.
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Assets and liabilities
Assets Liabilities
Details Market value Details Monthly payments Amount owing
Owner Occupied Property at: Na Mortgage with: N/A N/A
Investment Property at: Na Mortgage with: N/A N/A
Cash at bank
(includes fixed deposits) $ 79600 Car leasing N/A N/A
Other cash
(includes offset accounts) $0 Personal loans
1.
2.
$180pm $5600
Deposit paid on property $ 0 Overdraft 0 0
Motor vehicles:
1. 2007 Commodore SS
2. kia cerato
1. $25000
2. $9000
Other loans:
1.
2.
N/A N/A
Personal effects Na N/A N/A N/A
Business value (if self-employed) N/A Credit card limit:
$
(limit $5,000)
Minimum monthly
commitment 3%
$150
$1600
Shares and investments $40000 Other: N/A N/A
Superannuation $90000 Other: N/A N/A
Other assets (give details) N/A Other: N/A N/A
Total assets
$236200
Total liabilities $ 450
$7400
Surplus/deficiency: $ 236200 this is the difference between total assets and total liabilities
Errors to correct:
- This is an owner occupied proposal there is no mention that clients are going to rent it out
- You must complete this table only from current assets and liabilities not future purchses or future
loans – delete proposed purchase and loan values
- Other cash amount is incorrect
- The case study states the deposit has not been paid – delete
- There is no mention of any personal effects
- Credit card outstanding amounts ar incorrect
- Surplus/deficiency has to be calculated
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Accuracy is vitally important when gathering client information – you cannot make up values.
CURRENT MONTHLY LIVING EXPENSES (Provide a breakdown of the total amount listed in the case study — use your discretion)
Food/housekeeping $1000
Insurance (e.g. motor vehicles, home contents/ building, medical, life/income protection) $200
Utilities (e.g. rates, gas, electricity, transport) $800
Transport (e.g. public transport, petrol, registration, repairs) $400
Education (e.g. school, college, university) N/A
Dependents support (e.g. childcare, child maintenance) N/A
Entertainment $500
Other (detail below:
MONTHLY LIVING EXPENSES $2900
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Needs analysis Lines 1 to 7 are only for an existing home loan –
which they do not have – delete this info
8 What is your proposed purpose for the loan you are
applying for? We want to buy a new home
9 Branch access available with current lender N/A
10 Internet banking available with current lender N/A
11 Phone banking available with current lender N/A
12 Lenders not to be considered NIL
13 Type of loan sought Home loan
14 Preferred Interest rate range 4.5%
15 Payment frequency forth nightly
16 Redraw yes
17 Offset N/A
18 Salary crediting
19 Low fees and charges $25000
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Notes
NB: Providing substantive notes here is a compulsory part of your assessment.
 Philips and Jennifer also have FHA loan and they have to pay some
substantial amount to the lenders, who is government.
 They have good salary
 They have no plan for children for next 5 years
 They will arrange a big tour in next 5 years
 Both (Husband & Wife) are at good positions in their companies
 They have yearly expenses about $33000
 They don’t Spend on education as they have no children
 They demand Interest rate between 4.5%
 They can pay the monthly instalment of the loan
 They are well aware of the agent fees
 They are excited about their new home
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Anticipated fees and charges
Anticipated purchase price $490000
Deposit on property $ 50,000
Loan amount $440,000
LVR 89.7%
Purchase costs $ 283.20
Stamp duty on transfer (include transfer fee)
Solicitor/conveyancer (estimate) $ 1500
Rates and land taxes (estimate) $2975
Pest inspection (estimate) $300
Building Inspection (estimate) $400
Borrowing costs $300
Application/establishment fee
Valuation fee $500
Security admin fee $600
Mortgage stamp duty $0
LMI
$8580
Registration of mortgage $ 116.80
Release of mortgage $300
Search fees $400
Other N/A
Total of purchase costs $ 16,255
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Funds to complete
PURCHASE AND LOAN COSTS: AVAILABLE FUNDS:
Purchase price: $490000 Deposit if paid $50000
Lender application / valuation fees: $300 Cash savings: $79600
Transfer stamp duty $ 283.20 Sale proceeds: N/A
Solicitor fees: $1500 Gift: N/A
Other fees and charges $5891.8 FHOG: N/A
Other: N/A
LMI: 1. $8580 2. Add to Loan? Yes
TOTAL COSTS (A): $497,975 TOTAL OWN FUNDS (D): $79600
LOAN AMOUNT REQUESTED (B): $448580 OWN FUNDS REQUIRED (A-B) = C:
$49395
OWN FUNDS REQUIRED (A-B) = C $49395 SURPLUS/SHORTFALL (D-C) $ 30,205
You need to check your figures thoroughly based on case study facts.If the
clients have negative cash flow it means they cannot afford the property
which is not correct.This table needs to be accurate.
Completion of this Funds to Complete table (or similar) is very important because it details to all what funds
are required to settle this proposal and where they are coming from. Some points to correct –
- You need to correct amounts once you have corrected them on previous page
- You have double counted the fees and charges here because you have incorrectly added the
estimate to the purchase price and then listed them individually again
- Make sure the LMI fee is added to the loan amount
- As you propose to capitalise the LMI you need to total the loan amount and the LMI fee – to show
your proposed loan amount
- Make sure the client own funds contribution is correct and equals the difference between the total
costs and the loan amount requested.
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Loan interview diary
Name(s) of client(s) present at interview
Philip
Jennifer
Date of interview
Feb 5,2019
Location of interview
Tech City, 804 High Street, City East
Indicate all clients who were interviewed in person
Philip
Jennifer
Do all of the clients appear to clearly understand English? Yes
If not, have the services of an interpreter been recommended? N/A
Do all of the clients clearly benefit from taking out this loan? No
If not, what inquiries have been made to ascertain the level of benefit to each party of the loan?
Can we take loan on land?
Can home loan be taken jointly? yes
Is it hard to get a loan for land?
Is taking home loan beneficial?
Are any clients acting as though they are under duress or other disability? No
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Are any clients acting as though they are unsure of anything about the loan? Yes
Are any of the clients acting as though they are unable to comprehend their obligations? No
Are there any guarantors? No
If yes is answered to any of the above questions, have the clients been advised to seek
the services of a lawyer or financial adviser? N/A
Provide details of other pertinent information obtained during the loan interview which may be of interest
or of any unusual circumstances you may wish to record.
The information which I wish to record is given as:
1. Credit history
2. Cash flow history and projections for the business
3. Collateral available to secure the loan
4. Character
5. Myriad pieces of loan documentation that includes business and personal financial statements, income tax returns,
a business plan and that essentially sums up and provides evidence for the first four items listed
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Assessor feedback for Task 1: Resubmission required?
Competency not fully demonstrated. While you did not fully complete Appendix
pages I have transferred the information from Oral Assignment as they should be
the same in an y case.
Please see my comments on front page, Assets and Liabilities, Needs Analysis,
Anticipated Fees and Charges and Funds to Complete pages.
Lack of attention to the case study information has resulted in many errors
Not Yet Competent
See highlighted in grey to amend if given another attempt.
Competency not yet demonstrated
Please amend all highlighted areas in grey at Appendix 1.
Please strictly read and use case study 1 facts - Philip and
Jennifer Brown. See comments at Appendix 1. Your figures
need to be accurate and based purely on case study facts
and actual calculations where possible. Working in the
finance and mortgage broking field it is crucial that data is
effectively gathered, reviewed and processed to ensure that
your clients are given correct information when financing a
new purchase or refinancing an existing loan. It's vital that
the data from the case study is entered correctly. These
tasks are a skills test and working in the finance and
mortgage broking industry it is your job to ensure that your
clients are given correct information.
Yes
Task 2 — Assessing the clients’ situation
1. Based on the information provided in the case study and using the tools available to you
(e.g. loan calculators, including those available on lenders’ websites or Genworth.com.au), provide your
assessment of the clients’ loan application. This assessment of the clients’ needs is a critical prelude to
you completing Part 4 of the Oral Assessment requirement for this course.
Consider and comment on issues such as:
• maximum borrowing capacity of client
• capacity to meet deposit and total cash contribution for the loan required
• repayment requirements based on the loan required
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• do they require Lenders Mortgage Insurance (LMI), and if so, how much will it cost and what are the
options to pay fee
• what loan amount would you recommend
• likelihood that the clients will be able to meet all their financial obligations
• any other issues that may impact, now or in the future, on the clients’ ability to meet their
obligations, including any possible risks.
Provide data to support your comments and conclusions. (750 words)
Student response to Task 2: Question 1
Information that has been provided in the case study and using the tools that are available to you (e.g loan calculators,
including those loans of the lenders’ websites or Genworth.com.au), provide your assessment related to clients’ loan
application.
Following is the comment on the issues:
To figure out the maximum borrowing capacity I estimated a calculation by using Genworth servicing calculators. I
found that maximum borrowing calculation is $ 749189. With this amount they can buy a house of their day dream
from the lenders. Philip and Jennifer have been living together for 5 years and saved to fulfil their dream of a new house
and now they have enough savings to buy a new house. But they don’t have enough money to purchase it outright and
that is why they want to take a loan from the lenders. And this is the borrowing capacity they have.
( borrowing capacity incorrect based on case study facts please amend)
Because they have savings of $79600 and are willing to spend $75000 as the deposit since the house is $490000. It is
therefore important to have $49395 in their hands because the loan amount including the LMI costs $448580 and an
additional cost of expenses.
Repayment is defined as the amount we need to annually pay fortnight game. According to the repayment style
applicant must pay $2283 monthly. Comprise borrower and lender decided that they payment will be paid for the actual
interest rate of 4.50%. They will pay 3.5% if they consider J.G. Wentworth broker.
They surely require lenders mortgage insurance. The loan mortgage insurance is $8580. They have to pay $8580 to
insurance company at interest rate of 4.5% for their buildings or life, income protection. For instance: they might lose
their jobs as it has happened in few cases, they can acknowledge them about the reason and claim that money to
recover. That is why Philip and Jennifer maintained this from their personal income month after month, so they can
claim the money when necessary.
Accountants may be eligible for some special discounts which includes getting there LMI waived as they are well
known by banks to be low risk borrowers with long term career prospects and a high income potential. However, there
are some minimum eligibility criteria that must be met to qualify. This includes the minimum of $120000- $150000 pa.
Hence, making Jennifer not qualify as she only has $95000 as earnings per annum.
If recommendation is taken from the lenders and follow consumer protection act 2009 according to which all legal
entities and constraints are already being and explained briefly so there should be no confusion can meet the objectives
properly. There is various financial restriction like- fluctuation in interest rate, tax amount, charges etc,
Financial terms and conditions are affected frequently by financial risk which is pretty common. For better conclusion
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in the end people come to take financial risks. If financial risk occur it may result in the negative impact on people mind
and they will consider that borrower must have been aware of this risk while taking a loan.
2. (a) Most lenders stress test loan repayments by adding an additional 2–3% on to the loan
repayments to make sure a borrower can afford the repayments. If interest rates moved
3% higher, what would Philip and Jennifer’s loan repayments be, and do you think they would be
able to cope with the extra repayments?
Student response to Task 2: Question 2(a)
2.(a) They amount of repayment is now $ 2283. If 3% is added than amount will be
Total amount = $3147
Difference of $864
2. (b) What could you recommend that may remove this consideration as a risk factor?
Student response to Task 2: Question 2(b)
2(b) To remove this consideration as a risk factor, I would suggest that Philip and Jennifer take there mortgage at a
fixed rate hence wont be affected by the changes in the interest rates as opposed to variable rate which may fluctuate
and may cause an increase in the repayments.
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Assessor feedback for Task 2: Resubmission required?
Competency not fully demonstrated.
Q1. I have highlighted several errors in values which require correction:
- Maximum borrowing capacity is incorrect
- LMI amount is incorrect – see Task 1
- They only have savings of $79,600 and no deposit has been paid –
refer to case study
- I am not sure what you are referring to with loan amount $297487 –
there is no such information in case study
Other issues that should be covered in your response include:
- whether or not there is any “Accountant’s professional package”
that you have investigated as per Jennifer’s request
- impact of Jennifer previously owning a part of a property and its
impact on FHOG and Stamp Duty concessions
Q2a Not yet competent. I assume these are annual figures but not worked
out on correct loan amount. Please recalculate using online loan repayment
tools – you do not simply add 3% to repayment amount
Q2b. Lenders do not normally increase loan terms just because interest
rates increase – they increase repayments. What is a simple way clients can
keep the same interest rate for a set period?
Competency not fully demonstrated.
Task 2.1
See issues highlighted in grey to address with
financial data to support your comments. You need
to show your calculations based on case study
facts.
Task 2.2b
Competency not fully demonstrated.
fixing the entire loan means they lose the ability to make
additional repayments and to have a redraw facility which
they have stated is very important to them. Is there another
option whereby the whole of the loan isn’t just at a fixed
rate?
Yes
Page 25 of 57

Task 3 — Borrowing options
Although Philip and Jennifer are looking to borrow at approximately 90% LVR, what other options could you
present that would avoid the cost of LMI? (100 words)
Student response to Task 3
LVR should be less because the lesser the LVR the more favourable it is for the borrower so it is not a wise decision to
borrow 90% LVR. As a matter of fact the applicants need to increase their savings so that their loan to value ratio
becomes lower as compared to the borrowing amount otherwise they may high amount as a repayment and interest to
the lender at the end.
Borrowers could also seek help from friends or family to increase the amount of money available as deposit hence
reducing here LVR.
Assessor feedback for Task 3: Resubmission required?
You have not address the question - greater savings and contribution is one option. What
other options are available to the clients – can family assist in any way?
Competency not yet demonstrated
While you are on the right track and offered some option
syou need to offer other suitable options available to the
client. There is one other key way that family can assist
through support – what is this called?
Yes
Task 4 — Reasonable enquiries
In the course of gathering information about the couple, you are required under the National Consumer
Credit Protection Act 2009 to make all ‘reasonable’ enquiries to determine a borrower’s objectives,
requirements and financial situation.
Identify at least six (6) ‘reasonable’ enquiries that you would make with the clients in the case study and
explain why these enquiries are important in terms of NCCP compliance. (200 words)
Student response to Task 4
Before making final decision, it is necessary to have enquiries with client about providing financial helps to the client.
In order to explain the necessity of NCCP compliance I have made six enquiries.
This include the amount of credit required or maximum amount of credit sought or desired credit card limit.
How long the credit is required. In my case Philip and Jennifer are seeking upto 30yrs of mortgage.
Page 26 of 57

The reason and benefit the consumer is seeking the credit. This may include various reasons from investment,
finance reinvestment, mortgages e.t.c Philip and Jennifer would like to secure a home mortgage.
If there are particular or specific features or flexibility the consumer would like in the product. Philip and Jennifer
requested for an interest rate of 4.5% and presumably lower.
If the consumer understands the cost and any additional risks in the feature. I explained to them why a fixed rate
would be ideal in interest rate than a variable rate and explain the possible risks with both options.
In order to understand that whether they will be able to cope up with the current terms and conditions of the loan or
not I have made enquiries about their current assets and liabilities.
Assessor feedback for Task 4: Resubmission required?
Competency not demonstrated. Question not only asks you to identify 6 enquiries
but also to explain why they are important from NCCP perspective. Please expand
on each of your response.
Competency demonstrated
No
Task 5 — First Home Owners Grant
Describe the First Home Owner’s Grant or home buyer assistance scheme benefits and stamp duty
concessions that are available in your State or Territory, who would be eligible and what would be
their benefit? Are Philip and Jennifer eligible for any assistance?
Note: Please identify which State or Territory you are from in your answer. (150 words)
Student response to Task 5
First Home Owner Grant (FHOG) is a national scheme which is introduced for granting loan to individuals who are
looking for their new home. In such a case, the first-time grant receiver is not required to be repaid. If Philip and
Jennifer approach this buyer assistance scheme in the area of Victoria than they would be eligible for a loan for 30
years period which would be attracting a lower rate of interest. In order to apply for FHOG, there are several criteria
which needs to be satisfied. These criteria include the following
The home must be less than five years old. It can be a house, townhouse, apartment, unit or similar, but it must be
valued at $750,000 or less and be the first sale of the property as a residential premise. You’re not eligible for the
FHOG if you or your spouse/partner have already:
Received the FHOG in Australia.
Owned a home or other residential property in Australia, either jointly or separately, prior to 1 July 2000.
Lived in a home in Australia which either of you owned or part-owned on or after 1 July 2000, for a continuous period
of at least six months.
These criteria apply even if your spouse/partner is not an applicant with you for the FHOG.
You may still be eligible for the FHOG if you or your spouse/partner purchased property on or after 1 July 2000
and have not lived there as your home. For example, Tom bought his first property in July 2004. It was a house and
Tom has always rented it out. As he has never lived there himself, this house is not considered to be his first residential
Page 27 of 57

home and he may be eligible for the FHOG. In addition to this, stamp duty is applicable on the property depending on
the value of the property and the nature of use for the same. In addition to this, the stamp duty is also computed
considering the concession and exemptions which are associated with the property. If an individual is purchasing a
building or a new home in Victoria region of Australia and the value of the property is up to $ 750,000 then the
individual would be entitled to $ 20,000 as FHOG. In addition to this, there are also concessions and exemptions which
are available on Stamp duty and the same are listed below:
 One off duty exemption is available for PPR valued up to $ 600,000 or a concession for a PPR will be
a dutiable value from $ 600,000 to $ 750,000.
 One of reduction of up to 50 per cent for a PPR valued up to $ 600,000 if an individual enters into a
contract before 1 July 2017.
 A duty concession for an off the plan property either as a land and building package is also available.
 A concession which is available for pensioner for a new or established home which is valued up to $
750,000.
 A concession is available when a property is brought with the intention of being primary home and
the value of the same is up to $ 550,000.
 There is also an exemption which is available for first home owner with family exemption for which
a one of duty or exemption is available for property valued at $ 200,000 or less.
In the case which is provided Philip and Jennifer are not eligible for FHOG as Jennifer once owned a home which she
lived in with her sisters. Therefore, Philip and Jennifer cannot available FHOG as all criteria is to be met. In the case of
stamp duty exemption or concession, Philip and Jennifer would be eligible for taking the concession for the property
which is to be their first home and the value for the same is up to $ 550,000.
Assessor feedback for Task 5: Resubmission required?
Competency not demonstrated. You have not addressed the question in full – you have to
describe the forms of assistance that are available in your state – you have not done this.
Clients are not eligible for any assistance – why?
Competency not yet demonstrated
You are also required to detail the eligibility for
stamp duty. Please go into more detail. Would
Philip and Jennifer be eligible for any stamp duty
exemptions?
Why are Philip and Jennifer not entitled to FHOG?
what criteria applies to them?
Yes
Page 28 of 57

Task 6 — Philip and Jennifer’s professional network
1. Name three (3) parties, who are not directly involved in the loan processing, Philip and Jennifer may
wish you, as their broker, to keep informed of the progress of their finance application? (25 words)
Student response to Task 6: Question 1
Three ladies who are involved in the loan processing for Philip and Jennifer are given below-
1.Real estate limited
2. Insurance companies
3. Financial Adviser.
2. Briefly explain why is it important for the broker to remain informed of developments in the lending
process despite not being actively involved at every stage? (100 words)
Student response to Task 6: Question 2
The broker can assist at all stages of the lending process, despite not being required at each instance. With the
wealth of experience that brokers have in dealing with the lending process, they can confirm and assist the
consumer at each step of the way.
Keeping the broker informed will also ensure that the lending process is progressing without any issues or
difficulties and if any arises, then from the expertise and experience of a mortgage broker, they will always be
in a better position to advise and better give suggestions on the matter.
Assessor feedback for Task 6: Resubmission required?
Competency not fully demonstrated.
Q1. Competent. A financial adviser might be another.
Q2 Not Competent Sorry this does not make sense but I also don’t think the point
you ar trying to make answers the question in any case. Please resubmit.
Competency demonstrated
No
Page 29 of 57

Task 7 — Interest rates
Clinton and Jennifer have reconsidered the loan proposed and have called in to discuss whether they
should consider fixing the interest rate on their proposed loan — they have conflicting opinions and are
seeking your guidance.
1. Firstly, they need to understand the role of the RBA with respect to interest rates and why it is necessary
to have these controls. Conduct some research and answer the following:
(a) What is the role of the RBA with respect to the movements of interest rates?
(b) Why is it important to have these controls and how do they impact mortgage loans in Australia?
(c) Are banks obliged to follow the RBA cash rate? Explain the reason for your answer.
(200 words)
Student response to Task 7: Question 1(a)–(c)
A. The RBA is Australia’s central bank and has the over-arching function of maintaining a strong
financial system. One of the tools at its disposal is the adjustment of the interest rate, which is
down to either encourage savings and slow investment or vice versa.
B. It is important for the RBA to have these controls because they can be used to stabilise economic
movements. It allows the RBA to respond to domestic and international economic fluctuations and
ensure that the Australian economy is as stable as possible. Consider the following economic
scenario – if interest rates are incredibly low, and the value of real property has increased as a
result of cheap finance, and inflation is high as a result of all the increased spending, the RBA can
increase rates to slow lending and stabilise discretionary spending.
C. Banks are not obliged to follow the RBA cash rate. The RBA’s cash rate alone is not an accurate
reflection of a bank’s funding costs, particularly since the GFC, which has left all banks with the
task of raising funds in volatile global markets and through stronger competition for deposits. If the
RBA were to raise or lower rates, there is also no guarantee that the banks would mirror the
movement in the cash rate.
2. Philip and Jennifer have called to discuss whether they should fix the interest rate on their loan after
having received several conflicting viewpoints from family and friends.
Explain to Philip and Jennifer some of the advantages and disadvantages of fixing a loan. (150 words)
Student response to Task 7: Question 2
A fixed interest rate means that the interest rate that you will be charged over the term of your loan will not
change, no matter how high or how low the market may drive interest rates. Your payment will remain the
same on your last payment as it was on your first payment.
There are advantages and disadvantages of fixing the interest rate. Philip and Jennifer need to know and
understand this so as to clarify and be in a position to decide the best option.
Page 30 of 57

These are:
 A fixed rate loan carries the advantage that the borrower will always know exactly how much of
a payment is due each month.
 The disadvantage is that if interest rates drop significantly, the borrower continues to pay the
higher rate. In addition, a fixed rate loan can be harder to obtain from a lender due to higher
payments.
3. What other option/s can you suggest if they remain uncertain about whether to fix the rate on their
loan? (100 words)
Student response to Task 7: Question 3
If the applicants become confused regarding to the loan still they can go for consultation where there will be
a stop to their discussion. They need to consult a professional in order to make a sufficient decision.
I will also give them an example of a loan product that has both variable and a fixed rate. I will show them
how the interest rates in these products would behave in different adverse economical conditions that include
upward and downward interest rate fluctuations and explain there consequences so as to make them get the
picture and also show them how important it is to fix the loan so as they could plan there finances as they
liabilities will be fixed to avoid getting caught up in the economic adversities.
Reference:
Driven,E.(2014)'Changing how we think about war:The role
of psychology' The British Psychologist Society 2014 Annual conference.
The ICC Birmingham British Psychological Society,/07-09 May 2014
Page 31 of 57

Assessor feedback for Task 7: Resubmission required?
Competency not fully demonstrated.
Q1. Insufficient detail provided of the role of the RBA and why its controls
are necessary. You have also not answer Q c. Please expand on your
response.
Q2. Not competent – there are other advantages and disadvantages
Q3. Not competent – yes it is good that they should receive some financial
advice. But before that what options can you recommend – think loan
product options
Competency demonstrated
No
Assessor feedback: Section 1: Tasks 1–7
Date assessed: 9/03/2019
Does the student need to resubmit? Yes
Questions that need to be resubmitted All tasks
First submission Not yet demonstrated
Resubmission Not yet demonstrated
Questions that need to be resubmitted Tasks 1, 2.1, 2.2b, 3, 5
To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or
your resubmission in Section 1 and Section 2 of your written assignment.
Page 32 of 57

Section 2: Case study 2 — Richard and Pauline Jackson
Background
Richard and Pauline Jackson have a small mowing and gardening business in which they have been working
for the last eight years. As it is only the two of them in the business they operate as a partnership.
They have approached you to help restructure their finance, as they are finding the management of their
debts a struggle following the loss of one of their major commercial property contracts.
After further questioning, you realise that the situation is more serious than they originally explained;
they had missed payments on their mortgage, only pay the minimum on their credit card of 3% each month
and the work ute they have on lease is expiring. They have a $15,000 residual payment due and do not
have the funds available.
They lost the major contract 12 months ago and fell behind on the mortgage payments soon after.
They spoke to their lender (First and Last Bank) and a ‘hardship application’ was approved. The missed
payments were corrected by extending the term of their loan. Nothing adverse was recorded on their
credit file but they are still struggling with all the monthly commitments.
After reading the case study above and reviewing their funding position below, answer the questions that
follow:
Assets
46 Walters Road, Ritchfield $490,000
First and Last Bank savings account (joint) $1,200
Little Saving Building Society cheque account (joint) $2,300
Business debtors (unpaid invoices for work) $6,200
Ford Utility, 3 years old (work vehicle) $25,000
Holden Commodore, 7 years old (family car) $15,000
Superannuation — AMB Insurance (Richard) $46,000
Superannuation — AMB Insurance (Pauline) $29,000
Household effects (insured value) $66,000
Liabilities
Lender Situation Interest rate Monthly repayment Debt
First and Last Bank
(home loan — joint)
Currently up to date though had three-month extension
to contract after hardship application 12 months ago
5.7% $1,567.00 $270,000
Big Bank Visa card
(Richard)
Only able to repay 3% per month for last six months 18.95% (pays 3% per month)
$240.00
$7,800
(limit $8,000)
Little Bank Visa card
(Pauline)
Only able to repay 3% per month for last six months
Is over limit by $800
21.5% (pays 3% per month)
$90.00
$3,800
(limit $3,000)
My Domain
Furniture Store
Did not keep to interest free contract and paying debt by
instalments
28.50% $370.00 $3,400
Super Car Loan lease Four-year contract expiring next month and need
$15,000 to pay residual
n/a $850.00 $15,000
(residual)
Landscape supplies
monthly account
Purchase approx. $1,000 per month in supplies, they are
behind one month
n/a $1,000.00 $1,500
Total $4,117.00 $301,500
Page 33 of 57

Assignment tasks (student to complete)
Task 8 — Establishing level of financial knowledge
What communication skills might you use to confirm Richard and Pauline’s understanding and knowledge
about credit and finance, as well as their current position, including establishing their requirements and
objectives with the refinance? (150 words)
Student response to Task 8
I may need excellent customer service skills to confirm the understanding of Richard and Pauline about
credit and finance. Both of them are partners in the company and have decided to refinance their business in
order to mitigate the losses from their previous investments.
To understand them better I need effective business communication skills which include listening. This is
critical for the success of any verbal communication. I will build this by showing interest and paying
attention in what they are saying.
I will maintain eye contact and use body expressions such as nodding to show that I have understood.
I will ask questions to clarify and get a better understanding of the matter. These involves asking both closed
questions and open questions.
By asking them closed questions, I seek to obtain and confirm factual information’s, confirm statements and
opinions and test my understanding of what another speaker has said.
By asking open questions like: how can I help you today? I seek to establish a rapport by developing a
conversation and get detailed answers and eventually uncovering their real view or problem and elicit their
feeling’s or opinions on a topic.
These skills will help me understand their current situation and eventually know their understanding which
will in turn put me in the best position to make rational decisions on the options available to meet there
refinancing needs.
Assessor feedback for Task 8: Resubmission required?
Competency not fully demonstrated. You have not addressed the question.
Please revisit your course notes, Topic 2.1, Part 1 and look at what
communication skills you might use to establish and confirm client’s level of
knowledge.
Competency demonstrated
No
Page 34 of 57

Task 9 — Responsible lending obligations
The National Consumer Credit Protection Act 2009 imposes ‘responsible lending’ obligations on brokers
that must be satisfied by all people arranging loan applications. The primary objective under responsible
lending guidelines is that the credit facility offered to the borrower is ‘not unsuitable’ for the borrower,
meets their requirements and objectives and will not create substantial hardship.
1. In your own words how would you define ‘substantial hardship’ (detailed information on this subject is
found at RG 209 issued by ASIC)? (150 words)
Student response to Task 9: Question 1
According to ASIC 2009, credit is in few cases unfit for lenders as if they were unable to fulfil the following
requirements and targets for the loan. In this case, the borrower faced substantial difficulties, which means
that it is difficult to deal with the situation and this type of critical situation is known as substantial
difficulties.
Substantial Hardship is not clearly defined by National Credit Act or even by law. The definition can be
made clear by analysing different case laws which are associated with substantial hardship. In simple words
substantial hardship can be refered to as a situation where gross monthly income of an individual is below
federal poverty line. This also means that the individual is facing significant financial disability.
Loss of business by clients mean that this may translate to financial hardship. This may bring about difficulty
in meeting obligations such as servicing of the loans, and any other financial liabilities. This may also
translate to difficulty in meeting the living expenses and the daily cost of living.
This may have an effect in the client’s credit ratings and may affect future ability to obtain loans.
2. What are the benefits of debt consolidation for Richard and Pauline? (100 words)
Student response to Task 9: Question 2
Since Richard and Pauline have six different loans for various lenders. They are currently paying $ 301,500
to the lender, which is very difficult for them. In this case, if they take a large loan from the bank to repay the
debt consolidation, the amount of repayment, interest, stress, etc. will be reduced. These are the advantages
of debt consolidation, but apart from these advantages, debt consolidation helps to reduce the amount of the
loan that will make it easier for both partners to repay one loan.
Page 35 of 57

3. Richard and Pauline have decided to consolidate their debts into their home loan with two splits,
one for the existing home loan and a second split for the all other debts. They will not be including the
landscaping supplies account as they pay this in full each month and will clear the outstanding $500
from business account.
In the template below provide a new liabilities summary once Richard and Pauline have completed the
debt consolidation including their new monthly repayments.
Note: They have chosen to refinance with ‘One State Bank’ who are offering a 4.5% interest rate on a
variable, principal and interest loan over 30 years.
Student response to Task 9: Question 3
Response
Lender
Interest rate Monthly repayment Debt
First and Last Bank (home loan — joint) 5.7% $1,567.00 $270,000
Big Bank Visa card (Richard) 18.95% (pays
3% per month)
$240.00 $7,800
(limit $8,000)
Little Bank Visa card (Pauline) 21.5% (pays
3% per month)
$90.00 $3,800
(limit $3,000)
My Domain Furniture Store 28.50% $370.00 $3,400
Super Car Loan lease n/a $850.00 $15,000
(residual)
Total To be consolidated. $3117 $300000
Total amount to be paid after
consolidation. (4.5%)
$870.8 $313500
Page 36 of 57

4. What savings will Richard and Pauline obtain in monthly repayments?
(Include calculation of how you determined the savings.)
Student response to Task 9: Question 4
Previous repayment amounts are= ($1567+$240+90+$370+$850) = $3117
The monthly repayment of debt consolidation is $870.8
So, after debt consolidation with One State Bank Richard & Pauline monthly savings will be
= ($3117-$870.8)
=$2246.2
Assessor feedback for Task 9: Resubmission required?
Competency not fully demonstrated.
Q1. Not Competent – the highlighted comment is relevant to answer but
does not fully explain substantial hardship – what does loss of business then
mean to client’s ability to meet loan and living expense needs?
Q2. Competent
Q3. Not Competent, refer to the case study and the question – there are to
be two loans only and they have an interest rate of 4.5% on each. I am not
sure what the $10,000 is meant to represent?
Q4. Not competent you will need to correct this answer once you correct Q
Task 9 (3)
Competency not yet demonstrated
Your answer should show (as the question stipulates) their new
liabilities summary with one home loan with two splits, one for the
existing home loan and a second split for ALL other debts. Your
answers shows five splits. Don’t forget to also show the landscaping
supplies amount as they are an ongoing liability.
Task 9 (4)
Competency not yet Demonstrated
Once you correct Task 9.3 then the actual monthly savings will get
amended to the correct amount
Apply the following and resubmit:
Total Current Monthly Repayments minus New Monthly Repayments =
Savings Per Month
Missing is landscaping supplies amount please include in your total.
Yes
Page 37 of 57

Task 10 — Self Employed special considerations
1. As Richard and Pauline are self-employed, what documents will you need to obtain and assess their
income? (150 words)
Student response to Task 10: Question 1
Final annual financial statements signed by the director’s partners for all borrowers and related entities
covering a period of two consecutive years plus the personal taxation returns for each director/partner/
guarantor and trustee for the same two years.
The supply of an ATO notice of assessment relating to the year’s tax returns is mandatory because this
allows the lender some comfort that the tax returns being used to assess an applicant’s ability to repay a loan
are legitimate.
2. If a Low Doc application is an option for the customer, name three (3) extra documents you will need to
obtain and assess. Explain how each these documents will establish their income? (150 words)
Student response to Task 10: Question 2
The three extra documents I need to obtain and access in provide Mortgage Loan to the lender are
discussed below-
 Bank statement which is the most effective documents for self-employed people to get mortgage.
Bank statement will proof how much money Richard and Pauline enter in their accounts and how
much money does they cash out from the business. If their cash out from the business is higher than
cash in then as a bank manager I will not have any option rather reject the proposal. Because the
bank statement clearly shown that they will not be able to repay us.
 Business activity statement need to be obtained by then so that I can measure about any tax
obligation and to prove this they need to provide previous 12 months documents.
Letter from the accountant is the most important documents which I need to obtain so that I can take
decision while approving mortgage.
Page 38 of 57

3. Explain how applying for a ‘Low Doc Loan’ could lead the mortgage broker to be accused under NCCP
of recommending an ‘unsuitable’ product. (250 words)
Student response to Task 10: Question 3
The meaning of low doc loans is providing loans to the people who are not verified yet by the lender or the
broker of mortgage. Low doc loans verified by the person himself and this is designed primarily so that Bank
can take proper care of self-employed borrowers who doesn’t have any kind of proof to show their income
level to take the mortgage. This kind of people are using low doc loan where they can take loan by providing
Les documents connected to the need of loan and mortgage broker provide them this loan. The national
consumer credit Protection Act under 2009 recommend the protection of customers and lenders in taking
mortgage. ‘Unsuitable’ is the common word within NCCP because it indicates people who can be able to
prove that they can meet the objectives and requirements of the loan along with can be repay money on time
is taking loan rather than unsuitable person. It increase responsibilities for customer to prove their suitability
rather lenders. This is the reason, people who doesn’t have enough time to stay in this business world by self-
employed come to low doc loan because they provide loan by having low documents. Lender doesn’t take
any traditional documents for borrowing money for the borrower rather lenders make it easy for the people
who are self-employed but having problems due to face losses in the business.
Assessor feedback for Task 10: Resubmission required?
Competency not demonstrated.
Q1. Not competent. You have named the correct documents. Refer to pages
10 and 11, Topic 3.3 for guidance
Q2. Competent
Q3. You have done enough to demonstrate competency
Competency Demonstrated
No
Page 39 of 57

Task 11 — Advising on strategies
Following the presentation of your proposal, Richard and Pauline say that they would like your advice
regarding loan and debt management strategies that could help them to repay their home loan as quickly
as possible.
• List at least three (2) strategies or methods that will help them achieve their aim.
• Provide the advantages and disadvantages of each.
Note to students: You may refer to the MoneySmart website for information on this subject and your
answer may also include, but not be restricted to, available mobile phone apps used for debt management.
(300 words)
Student response to Task 11
 Open an Offset Account
Another option to help you save money and pay off your loan faster is to open an offset account. An offset
account generally will reduce the amount of interest you need to pay on your principal loan balance. For
example, if your offset account has a balance of $50,000 and your home loan balance is $300,000, your
loan interest would be calculated on the difference, being $250,000.
The interest saved by having funds in an offset account is usually higher than would be received in a savings
account and is not subject to income tax.
Not only will you have immediate access to your money, but you will save on the amount of interest
payable and pay off your home loan sooner.
 Increase the frequency of your repayments
You could save on interest and pay off your mortgage sooner by making fortnightly or weekly repayments
instead of monthly, and in turn build equity in your home.
If you choose fortnightly repayments, you will pay half of your monthly repayments each fortnight. Because
there are 26 fortnights every year, this is equivalent to making an extra month’s repayment each year. This
means you’ll build equity in your home more quickly, plus pay off your loan sooner and save in interest.
Money smart website:
Advantage:
• By using this website people can be able to buy their necessary items
• People or borrower don’t need to carry any kind of cash
• The money which are provided by using this website lenders make a record of it.
• They make one payment for consolidates bills
Disadvantages:
• But the most important and common problem of this lender is it took high amount of interest
• Not only interest but also require extra fees
• If for some reason I lose track it can be a great problem for me
• The impulse buying increase due to this reason.
Page 40 of 57

Debt consolidation:
Advantage:
• This has great advantage to use, as the due rates can be tracked easily.
• The borrower who are using this have to pay single interest at a low cost
• Through this method borrower can be pay all the lenders at a time and can stop increasing debts
and debt interest
• This method can be stopped total debts amount fees charges
Disadvantages:
• If borrower sign up by using wrong debt information it will cause problem in the tracking because
the amount they will enter that will be automatically loaded in the software.
• Sometimes interest rate may increase due to government imposes
• There are few agencies who counsel the borrower but they don’t provide valuable suggestions to
the borrower they only think about their business.
The Snowball plan:
Advantages:
• It includes additional people while researching the market
• It targets small markets and use unique way to identify target population
• The plan or method provide best result in qualitative research rather than quantitative.
Disadvantages:
• This method may sometimes biased in the business
• It has limited resources to use for helping then to achieve the aim of getting mortgage at a lower
interest rate for their business.
Assessor feedback for Task 11: Resubmission required?
Competency not fully demonstrated. These are okay strategies but what
piece of sound advice can you give to clients on how they can best lower the
interest expense and pay off their loan more quickly. There is one simple
strategy
Competency Demonstrated
No
Page 41 of 57

Task 12 — Impact of credit history
Richard tells you that his former wife failed to properly meet their unsecured personal loan debt
obligations before they separated. Although he eventually repaid the debt he is afraid that this incident
may count against him when he applies for a loan. There are a few things Richard can do as he is concerned
about his credit rating. What information would you provide in the following situations?
1. Provide Richard with the details of two (2) major credit reporting agencies and explain what information
may be recorded on his credit file. (Information can be sourced from the websites of credit reporting
agencies and <http://www.oaic.gov.au>.) (200 words)
Student response to Task 12: Question 1
The two major credit reporting agencies are given here with valid information such as-
• Transunion: this company has different software and every borrower have their own account in the this
agency and each month borrowers are updating their information by themselves. If they are unable to submit
update in the software then they provide updated information to the office and company update the
information. They keep record of public, current and former address, name and employment information.
The credit report also include the financial reliability of the borrower.
• Experian: they are keep record of debt history of a borrower and find out the money which I have in my
hand. Credit report such as-is debt history, in one history are kept by the lenders so that they can take further
decisions while giving money. Credit agencies the people Robert long term the word words so that they can
get rid of the debt who is create or increasing problems in their personal and professional life. Considering
this fact experience working as a credit report agency and provide credit to the people who need this the most
bye tracking their information Inna valid software so that when necessary they can find it and can use to
access for future.
2. Richard has decided he would like to obtain a copy of his credit report from either Equifax or
Dun & Bradstreet. Explain what options are available for the chosen provider, how long it takes
to obtain a copy, and the associated costs. (100 words)
Student response to Task 12: Question 2
As Richard decides to obtain credit report from credit rating agency wither from Equifax or Dun &
Bradstreet.
Using Equifax;
One of the ways you can get a copy of your free credit report is by visiting www.annualcreditreport.com . By
law, Richard is allowed to get one free copy of your credit report every 12 months from each of the three
major credit bureaus -- Equifax, Experian, and TransUnion. This is free for Richard is eligible for such credit
score for making comparisons and knowing his credit score.
In addition to this, there is also an option which is available to Richard is that of taking assistance from
annual credit report services. Richard can also contact the annual credit report service:
 By calling: [phone];
 By mailing: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
In case, Richard decides to opt for the mail option then , he should be sure to include his name, Social
Security number, current and previous addresses, date of birth, and telephone number.
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For his protection, he will also need to verify his identity with an acceptable form of identification such as
drivers licence or passport.
If Richard requests his report online, he should be able to access it immediately. If he orders it by phone, it
will be mailed to him within 15 days. It is also an option available to Richard to contact the business for
requesting credit report.
3. If there are errors on file, what are the options for Richard to follow to have these errors rectified? Hint:
Refer to the Equifax website. (150 words)
Student response to Task 12: Question 3
In case of error on the file, Richard can rectify it by following the steps below.
1. Firstly, he needs to submit a request to equifax via there Corrections Portal.
2. Once they receive his request, they will provide him with written confirmation that it has been received.
If all relevant information is provided it could be as simple as the making the necessary amendment e.g.
updating a default to ‘paid’ or deleting a judgement.
3. Equifax contacts the credit provider.
If necessary they will contact the credit provider on his behalf to have them verify the accuracy, or
otherwise, of the correction request.
4. Equifax reviews the credit provider's response.
Equifax will then review the information given by the credit provider and make any amendments, if any, to
the entry/entries on your credit report.
5. Equifax finalises the investigation.
They will notify Richard in writing what the result of there investigation is. If a correction is required,
Equifax will send you a letter notifying him that the correction has been made. Equifax will also issue him
with an updated copy of your Equifax credit report so he can see what has changed.
4. What is the Lender legally obliged to advise the client if they decline an application due to the content of
the credit agency file? (100 words)
Student response to Task 12: Question 4
If a loan is declined because of the information in a credit report, the credit provider must tell the applicant
the reason for declining the application and give the applicant the name and address of the credit reporting
agency.
They must also tell the applicant that they have the right to access the agency’s file. This requirement is
provided for in the privacy act.
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5. What alternate options can you suggest to Richard and Pauline in the event that the loan was rejected
by the lender you initially proposed due to a credit report. (150 words)
Student response to Task 12: Question 5
If loans get rejected from the bank than Richard & Pauline need to be go for next backup. Injection Mein
auto for various reason in terms of credit report because credit report is made based on bank statement and
the worst business history. So if any kind of bad experience of faces India business them the lender can reject
their proposal which is not good news for the border but he have to make another plan so that they can obtain
the objectives of taking loan and can fulfil the requirement of the loan within required time. Borrower can
use the consumer financial protection act to protect damages which occur for rejecting loan from the lender.
They can give complaint to the credit agency that their report is wrong, and we need to rectify the wrong
Information with effective prove. These are alternative way for Richard and Pauline.
As a broker would also recommend to Richard and Pauline, a lender called Pepper Money. This a lender who
deals with non-conforming loans. They do not need credit scoring or third-party lenders. They also allow
refinancing to consolidate multiple debt which would be ideal for Richard and Pauline.
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Assessor feedback for Task 12: Resubmission required?
Competency not fully demonstrated.
Q1. Competent
Q2. Not competent. There are processes to follow online and associated
costs or free options for clients to obtain a copy of their report. What are
they?
Not competent you have not answered the question? What is the processes
to be followed – Refer to the Equifax website
Competency Demonstrated
Q4. there is more to the requirements required here - refer to Topic 3.3
Part 11.5 pages 25-27
Competency Demonstrated
Q5. Not competent. As a broker what other options can you research and
recommend for clients? Are there lenders in the market who do with non
conforming loans
Competency Demonstrated
Task 12.2
Competency not yet demonstrated
More information is required. Other than once every 12
months what other basis can Richard access a copy of his
credit history record at no cost and do they provide a service
if Richard was in a hurry, what are his options and the costs
for Equifax (was known as Veda) Other than your course
notes you may like to look at ASIC’s Smart Money website
(https://www.moneysmart.gov.au/tools-and-resources/publications/f
actsheet-your-credit-report)
Yes
Page 45 of 57

Task 13 — External dispute resolution
During the loan process, Richard is starting to become upset with the time it’s taking to get him an
approval. Although you’ve explained that this is because of delays with the lenders processing system due
to staff being away, you’re concerned the matter may escalate beyond your control.
1. As a broker it is important to understand the role of the Credit Ombudsman. Explain the function and
role of the Credit and Investment Ombudsman (CIO) in the EDR process and the options available to the
claimant once a determination is made. (200 words)
Student response to Task 13 Question 1
The main role of the credit and investment of batsman in the area process is to solve different kinds of
complaints among participants and the consumers of their scheme. These are not government fund and not
regular Financial Service institutions whether they are doing their own business by supporting consumers
and lenders while taking loan for debt management or any other cases.
Participants are known as non-bank lenders, credit unions, debt collection firms, finance brokers, financial
planners, service aggregator, etc.
The members of the credit provided under either scheme which are recognized by OC even before they get
permission for disclosure of credit information in credit report.
If any person have complaint about the credit provider they can go directly to the CRO and they will get up
supporting service from them for solving this type of problems.
Once investigations have been finalised, following organisations policies and procedures, they are to inform
the client to which is there right of the;
Outcome of the investigation,
Reasons for arriving at the decision and
Proposed solutions.
The claimant or the client then has a choice to accept or reject the decision and any solutions proposed. If the
customer chooses to reject the decision reached through the IDR process, Inform the customer of their right
to take the matter to the relevant EDR service. Provide the customer with all the relevant information to
allow them to take this course of action.
2. What could be the maximum financial compensation limit imposed by the CIO?
(You can obtain this information on the CIO website.) (10 words)
Student response to Task 13 Question 2
The maximum monetary compensation limit in 2018-1019 is $3, 23,500 which imposed by CIO.
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Assessor feedback for Task 13: Resubmission required?
Competency not fully demonstrated.
Q1. Not competent. Please provide further detail on what a CIO does, the rights the
customer has and the obligations on the lender once a determination has been
made. Refer to pages 46 to 52, topic 2.2 of your course notes and resubmit.
Competency demonstrated
Q2. Competent. The amount you state has been superceded and from 1
November 2018 significant changes to penalties and structure of claims have
taken place. I recommend you refer to the attached link for the new entity
AFCA, but you do not have to resubmit on this response
https://www.afca.org.au/what-to-expect/outcomes-afca-provides/
No
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Task 14 — Effective access to files
The loan application is finally approved. Loan offers have been produced by the lender, as have numerous
documents that the client needs to access and review. The lender has requested these documents be
forwarded as soon as they are available. Richard and Pauline are away at the moment and their email
provider has a size limit on the data that can be sent via email. Name a service provider that could assist in
solving this problem? (100 words)
Student response to Task 14
There are different categorize service providers who can be able to assist in solving difficult problem in a
proper and effective way.
Pauline and Richard can get these documents through express postal services or parcel transfer services offer
by some companies like DHL. To save on time, these documents can be delivered to them by sending the
documents to them through express post services or through DHL or any other parcel delivery companies.
They will then receive it in time, read through them and send them back with a feedback after their review.
This will save on time and solve the email size limit problem hence getting the process still on track and on
time.
Assessor feedback for Task 14: Resubmission required?
Competency demonstrated. No
Assessor feedback: Section 2: Tasks 8–14
Date assessed: 9/03/2019
Does the student need to resubmit? Yes
Questions that need to be resubmitted All Tasks except Task 14.
First submission Not yet demonstrated
Resubmission Not yet demonstrated
Questions that need to be
resubmitted
Tasks 9.3, 9.4, 12.2
To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or
your resubmission in Section 1 and Section 2 of your written assignment.
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Appendix 1: Client information collection tool/
Fact Finder
Appointment date:
Appointment time:
Applicant 1 Applicant 2
Surname
Other names
Contact details Address
Phone (W)
Phone (H)
Mobile
Email
Employment
How long?
Previous employer (if less than two years)
How long?
Employment type
(FT/PT/Casual/Self-employed)
Gross income (p.a.)
Number of dependants
Motor vehicles
Loan purpose
Purchase price/Valuation
Deposit on property
Loan amount
Borrowing capacity (using Genworth
serviceability calculation)
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Assets and liabilities
Assets Liabilities
Details Market value Details Monthly payments Amount owing
Owner Occupied Property at: Mortgage with:
Investment Property at: Mortgage with:
Cash at bank
(includes fixed deposits)
Car leasing
Other cash
(includes offset accounts)
Personal loans
1.
2.
Deposit paid on property Overdraft
Motor vehicles:
1. 2007 Commodore SS
2. Kia Cerato Sport 2015
Other loans:
1.
2.
Personal effects Credit card limit:
$
Business value (if self employed) Credit card limit:
$
Shares and investments Other:
Superannuation Other:
Other assets (give details) Other:
Total assets Total liabilities
Surplus/deficiency:
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CURRENT MONTHLY LIVING EXPENSES (Provide a breakdown of the total amount listed in the case study — use your discretion)
Food/housekeeping
Insurance (e.g. motor vehicles, home contents/ building, medical, life/income protection)
Utilities (e.g. rates, gas, electricity, transport)
Transport (e.g. public transport, petrol, registration, repairs)
Education (e.g. school, college, university)
Dependents support (e.g. childcare, child maintenance)
Entertainment
Other (detail below:
MONTHLY LIVING EXPENSES
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Needs analysis
1 Name of your current lender?
2 What type of mortgage loan do you have?
3 Why did you choose this particular loan and lender?
4 What is the interest rate?
5 What are your payments? Amount
6 Frequency
7 Do you know the fees and charges?
8 What is your proposed purpose for the loan you are applying for?
9 Branch access available with current lender
10 Internet banking available with current lender
11 Phone banking available with current lender
12 Lenders not to be considered
13 Type of loan sought
14 Preferred Interest rate range
15 Payment frequency
16 Redraw
17 Offset
18 Salary crediting
19 Low fees and charges
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Notes
NB: Providing substantive notes here is a compulsory part of your assessment.
Page 53 of 57

Anticipated fees and charges
Anticipated purchase price
Deposit on property
Loan amount
LVR
Purchase costs
Stamp duty on transfer (include transfer fee)
Solicitor/conveyancer (estimate)
Rates and land taxes (estimate)
Pest inspection (estimate)
Building Inspection (estimate)
Borrowing costs
Application/establishment fee
Valuation fee
Security admin fee
Mortgage stamp duty
LMI
Registration of mortgage
Release of mortgage
Search fees
Other
Total of purchase costs
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Funds to complete
PURCHASE AND LOAN COSTS: AVAILABLE FUNDS:
Purchase price: Deposit if paid
Lender application / valuation fees: Cash savings:
Transfer stamp duty Sale proceeds:
Solicitor fees: Gift:
Other fees and charges FHOG:
Other:
LMI: 1. $ 2. Add to Loan? Yes/No
TOTAL COSTS (A): TOTAL OWN FUNDS (D):
LOAN AMOUNT REQUESTED (B): OWN FUNDS REQUIRED (A-B) = C:
OWN FUNDS REQUIRED (A-B) = C SURPLUS/SHORTFALL (D-C)
Page 55 of 57

Loan interview diary
Name(s) of client(s) present at interview
Date of interview
Location of interview
Indicate all clients who were interviewed in person
Do all of the clients appear to clearly understand English? Y/N
If not, have the services of an interpreter been recommended? Y/N
Do all of the clients clearly benefit from taking out this loan? Y/N
If not, what inquiries have been made to ascertain the level of benefit to each party of the loan?
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Are any clients acting as though they are under duress or other disability? Y/N
Are any clients acting as though they are unsure of anything about the loan? Y/N
Are any of the clients acting as though they are unable to comprehend their obligations? Y/N
Are there any guarantors? Y/N
If yes is answered to any of the above questions, have the clients been advised to seek
the services of a lawyer or financial adviser? Y/N
Provide details of other pertinent information obtained during the loan interview which may be of interest
or of any unusual circumstances you may wish to record.
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