FNS40815 - Compliance and Service Delivery in Mortgage Broking

This document provides a solution to an assessment task for the Certificate IV in Finance and Mortgage Broking (FNS40815). The assessment covers key areas such as identifying and interpreting compliance requirements, delivering and monitoring customer service, contributing to OHS hazard identification and risk assessment, managing personal work priorities and professional development, developing and nurturing client relationships, promoting the effective use of credit, and preparing loan applications. The compliance section emphasizes understanding the NCCP Act, the unsuitability test, and the importance of staying updated with regulatory changes. The customer service section focuses on building empathy, active listening, and delivering outstanding service to maintain client relationships and gain referrals. The solution also addresses monitoring compliance within an organization and the role of regulatory bodies like APRA in influencing lending practices. The document includes detailed answers and explanations for each task, demonstrating a comprehensive understanding of the subject matter.

Certificate IV in Finance andMortgage Broking
Assessment Task
FNS40815
Your details:
Name:
Address:
Phone:
Company name
Email:
Your assessment task
You are required to keep a copy of your assessment task for a period of 12 months.
Submit your assessment to our Education Team via [e-mail]
Plagiarism Statement
All assessments must be your own work and not a result of plagiarism or collaboration
with other students or workmates.
Assessment
The pass mark is 70% for each element. If you do not achieve this, you will receive
feedback via your email address and be asked to resubmit your assessment for a second
marking. Assignments will not be returned to you as they need to be retained for by us for
verification and audit purposes.
Task Assessments Total
Mark
Pass
Mark
Actual
Mark
1 Identify and Interpret Compliance Requirements 27 19
2 Deliver and Monitor a Service to Customers 39 27
3 Contribute to OHS Hazard Identification & Risk Assessment 41 29
4 Manage Personal Work Priorities and Professional Development 24 17
5 Develop and Nurture Relationships with Clients, Other
Professionals and Third Party Referrers
17 12
6 Promoting the Effective Use of Credit 15 10
7 Prepare a Loan Application on Behalf of Mortgage Broking
Clients
64 45
8 Steps Taken by the Credit Provider 23 16
Total 250 175
Assessor’s Initials: ____________________
Assessment Date: ____________________
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Introduction
Objective The objective of this Assessment Task is to demonstrate that you have the
skills and knowledge required to conduct a client relationship and comply with
statutory, industry and organization compliance requirements.
Elements to
be assessed
To achieve this objective, you will need to demonstrate your ability to:
The assessment tasks in this assessment will allow you to demonstrate your
knowledge and skills in relation to these elements.
Assessment
process
Start by:
1. Reading the Assessment Task.
2. Type your answers to the assessment tasks into this template document
(hand-written answers are not accepted)
3. Submit your completed document by uploading it on the ‘Ready for
Assessment’ area of www.CPDplus.com
Don’t forget to keep a copy and retain it for 12 months.
Need help? If you have any questions or would like to request a digital copy of this
assessment task, please email the Mentor Support Team at
[e-mail]
Statement of
Completion
Upon successful completion of this assessment you will be awarded the
Statement of Completion forFNS40811 Certificate 4 in Finance and Mortgage
Broking.
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Task 1: Identify and Interpret Compliance Requirements
1. Identify
compliance
requirements
Mortgage brokers face important compliance requirements, the foremost among
them being the reasonable lending provisions of the NCCP Act. The penalties for
non-compliance include loss of license (for businesses) and removal from the
industry (for individuals). If fraud is involved there may also be the criminal
penalties of fines and / or imprisonment.
Compliance requirements are not static. It is therefore important to stay up to
date with them.
Mortgage brokers also need to keep up-to-date with the actions of the regulatory
authorities such as APRA and the Reserve Bank. Their actions may not amount
to direct regulation, but through their effects on interest rates and bank lending
these authorities can have a very direct impact on the business mortgage
brokers are able to do.
(a) A key requirement of the responsible lending obligations is the ‘unsuitability test.’ What must a
mortgage broker do to comply with the unsuitability test?
No Mark
1. To make reasonable enquiries about the borrower’s requirements and objectives /1
2. To make reasonable enquiries about the borrower’s financial situation /1
3. To take reasonable steps to verify that financial situation /1
(b) List the sorts of items a client’s requirements and objectives could include (as indicated by
ASIC).
Mark
As indicated by ASIC inquiries concerning requirements and objectives include:
1. The amount of credit needed or the maximum amount sought;
2. The timeframe for which it is required;
3. The purpose and benefit sought; and
whether the consumer seeks particular product features or flexibility, and understands the costs of
these features and any additional risks.
/2
(c) Leading credit providers and other financial organisations have code of ethics, sometime
called codes of conduct. Select one of them and summarise it by itemising its main principles.
Mark
Australian financial system is regulated is that industry associations are encouraged by ASIC to
draw up codes of conduct that can be used as a guide to legal and ethical behaviour. The
industry associations that draw up the codes of conduct have minimal disciplinary powers, but
the codes have legal force in that the courts and external disputes resolution schemes such as
the Financial Ombudsman Service (see below) treat them as being guides to correct behaviour
that are binding on members and non-members alike.
FALSE AND MISLEADING CONDUCT – Misleading and deceptive conduct and false and
misleading representations by corporations in trade or commerce are prohibited under the
/4
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Australian Consumer Law (ACL). A court may impose monetary penalties, grant injunctions to
prevent the prohibited conduct continuing or being repeated or to require that some action be
taken such as cancellation of contracts and an award of damages. The offence also overlaps
with fraud under criminal law, so fines and jail sentences may also be imposed.
Sub-total /9
Continued
(d) In point form, list the key information that the NCCP Act requires to be contained in a Credit
Guide.
Mark
The credit guide must be in writing and include:
1. The licensee’s name, contact details and Australian credit licence number;
2. Details on any fees and charges payable by the consumer
3. Details of any commissions likely to be received from the lender;
4. The names of the licensee’s six main lenders;
5. Details regarding complaint handling, including contact details of internal and external
dispute resolution processes;
6. Information about the licensee’s obligation to provide a written copy of an unsuitability
assessment upon request.
/3
(e) It is important to keep up to date with compliance requirements so that the required changes
can be made to organization procedures and product offerings.Suggest three sources that
you can use.
Mark
To Keep up to date with compliance requirements
Professional Association of Australia
1. MFAA – The Mortgage Finance Brokers of Australia
2. FBAA – The Finance Brokers Association of Australia inform their members of
changes to requirements before they happen. The professional associations code
of practice can also be used as a sound guidance to compliance requirements.
/3
(f) Explain the requirement for Australian Credit Licensees to keep a training register.

Mark
ASIC requires a business’s compliance measures to be documented although it acknowledges that
the level of documentation will vary from detailed policy and procedures manuals in larger
organisations to checklists in smaller organisations.Once a compliance system has been
established, it is implemented and maintained. Training has an important function in this process,
/2
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but it is not enough on its own. Compliance and ethical behavior must become a dominant value of
the business
(g) Explain APRA’s current attitude towards bank lending for investment properties.
Mark
Australian Prudential Regulation Authority (APRA) introduced restrictions that have impacted
lending for investment purposes. The banks have responded to the APRA changes by changing
serviceability requirements on investor loans; making it more difficult for investors to gain finance.
Borrowing capacity has been downsized, interest rates have risen and the repayments on existing
debt are assessed at a much higher rate.
/2
Sub-total /10
Continued
Task 1: Identify and Interpret Compliance Requirements Continued
1.2
Interpret,
analyse
and
prioritise
identified
complian
ce
requirem
ents
Some of the compliance requirements are difficult to meet. Unfortunately, also
there have been some ‘rogue’ mortgage brokers who have failed to comply – to the
disadvantage of their clients.
The finance planning industry has been plagued by non-compliance in the largest
planning groups, with the image of the industry being substantially tarnished as a
result. It may not suffer greatly because of the absence of an alternative source of
financial advice.
This is not so with mortgage brokers. They are just establishing their reputation and
consumers always have alternative of going to the lenders directly.
(a) Select three tasks you perform on a regular basis that are subject to compliance
requirements.
No Mark
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1. Find a lender /1
2. Complete the loan application. /1
3. Submit the loan application to the bank,and wait for the approval. /1
(b) Identify the compliance requirements that are relevant to the three tasks selected, indicating
the name of the relevant legislation, regulation or code of conduct.
No
1. ASIC- Application-specific Integrated Circuit /1
2. ACL – Australian Consumer Law /1
3. NCCP – The National Consumer Credit Protection ACT 2009 /1
(c) How does your organisation monitor your compliance?
Mark
Carrying out audits and monitoring on compliance areas and procedures is both an essential
business function and an ASIC regulatory requirement. The only way to ensure that processes work
is to audit them and assess the results, carrying out gap analysis and reviews on a frequent and
rolling basis. It is also important for a business to have regular, perhaps annual, compliance reviews.
Essential components of a compliance review include a review of the licensee’s policies and
procedures and a check of client files to make sure that the policies and procedures are being
followed.
/2
Sub-total /8
Total /27
Task 2: Deliver and Monitor a Service to Customers
2.
Identify
customer
needs
The relationship with a client is generally described as beginning with the
establishment of empathy. In other words, it is first necessary for a mortgage
broker to establish that he / she is truly interested in the client and the client’s
needs. It is only after that that the mortgage broker has established the right to
interview a client.
(a) Use the internet or any other source to find a definition of empathy.
Mark
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Empathy is the capacity to understand or feel what another person is experiencing from within their
frame and reference i.e., capacity to place oneself in another’s position.
/1
(b) List three open-ended questions that assist in developing empathy with a client? How do such
questions indicate empathy?
No. Mark
1. What makes you think it may be time for a change?
2. So, what’s going on?
3. How’s business?
/2
These open Questions provide information about needs and wants, and this is information
that any mortgage broker must have. /1
(c) List and explain the steps involved in an ‘active listening approach’.
Mark
Ask Questions - Find out about needs and wants of the client.
/1
Go BACK - Restate what the client has said about his or her needs to be sure the relevant details have been
heard and understood and to encourage the speaker to proceed further. The client’s thoughts and feelings
can then be used as a lead-in to further questions.
/1
SUMMARISE - to make sure both sides agree on the facts.
/1
(d)How is client service commonly monitored in your organisation? What are the two possible
outcomes?
No. Mark
1. Questionnaires /1
2. Client Surveys /2
Sub-total /10
Continued
Task 2: Deliver and Monitor a Service to CustomersContinued
2.1 Deliver
a service to
customers
In a survey on the reasons for referrals conducted by David Maister, only 10%
were due to the quality of technical work. The remaining 90% of referrals were due
to the quality of service.
This indicates that the key to maintaining client relationships and gaining referrals
is the provision of outstanding service. This has been described by Maisteras ‘over-
servicing’.
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(a) Describe three ways in which a mortgage broking organisation can attempt to ‘overservice’
clients?
No. Mark
1. Meeting up with the clients on a frequent basis in order to listen to their concern. /1
2. Provide wishes and birthday gifts and greets to the client on their birthday, anniversary etc. /1
3. Making the clients aware of the new products that have been launched and the changes that are
taking place in the market.
/1
(b) How would you keep a client informed about the progress of an application as it passed through a
creditor provider’s hands? What approximate timing might be involved?
No. Mark
1. The time lapse between interviewing the client and forwarding the credit application to the
credit provider, along with the advice to the client, should not be longer than two days
/2
2. It is important that the information should be passed on to the credit provider in a timely
manner. The key word is promptly, as soon as practicable after completion of the
preliminary assessment – on the same day if possible
/2
(c) Describe how you might attempt to resolve conflicts with clients.
Mark
1. Don’t react,respond
2. Let your position go
3. Focus on the other person
4. Seek Clarity
5. State your position.
Recognise the situation that is developing and immediately change the pattern by developing a
non-aggressive approach. Then change the situation from an adversarial struggle to a situation in
which both sides can win. This is commonly referred to as a “win win” situation.
/2
(d) How do you can prepare clients for the hiccups that can happen while their credit application is being
processed
Mark
Provide the borrower with interim updates, if practicable. Do not ask the borrower to provide
unnecessary information, particularly information that is not strictly relevant or which the lender
already has in its possession.
/2
Sub-total /11
Continued
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(e) The chapter on Operating a Mortgage Broking Business contains an example suggesting that a
mortgage broker acting in the best interests of clients should act as a Protector rather than an Expert.
What are the implications for this in regard to (i) advice given to clients and (ii) recommending the
most suitable loan products?.
No. Mark
1. New products are introduced from time to time, and features of existing products may
change. Mortgage brokers need to be alert to any information regarding change from
product providers, with information being disseminated through such means as team
meetings and seminars.
/2
2. Brokers should also be prepared to discuss the different products with theirs clients and
point out their different features so that an informed choice can be made.
/2
(f) How could you prepare yourself to deal with client concerns?
Mark
Sometimes it exists in the form of concerns about the broker or resistance to product terms such as
the interest rate. At other times it takes the form of a more formal complain. Either way, there is
resistance that needs to be overcome as best as possible. Once the need for a win win situation is
recognised and a more normal conversational tone and speech pattern have been adopted, if that
is required, the challenge is to make the win win outcome happen.
/2
(g) Give examples of the following legal breaches: breach of the duty of care, false and
misleading conduct, unconscionable conduct & conflict of interest without disclosure.
No. Mark
1. A broker owing a customer a duty if their negligence results in them tripping over a piece of
carpet. Likewise, they owe a customer a duty of care if advice that is negligently provided
causes them financial harm.(breach of the duty of care)
/1
2. A situation there may also be more fraudulent activity such as providing a false occupation
and forging documentation.(false and misleading conduct)
/1
3. The Business not giving the applicant enough time to, read an agreement, ask questions or
seek advice; and not disclosing or explaining the key terms of a contract. (unconscionable
conduct)
/1
4. Conflict of interest is where a mortgage broker recommends a specific financial product
because it allows them to obtain a larger commission, even though the product is
unsuitable for their client.(conflict of interest without disclosure)
/1
(h) Once a desirable market segment has been identified, a mortgage broking business can put
its mind o developing suitable marketing strategies. List examples of different strategies that
might be used.
Mark
By working with ideal clients, brokers are more likely to have the level of concern that is an
essential quality of professionalism. They are also more likely to develop the communication
with clients that leads to “engagement” – that is, a longer-term relationship that comes from
personal connection.- Look at your own ethnic and social background, the types of people you
/2
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grew up with and the types of people you went to school with. Considerations such as this
should lead you to the types of people you prefer to deal with. Likewise, it may be that you are
the sort of professional that they prefer to deal with.
Sub-total /12
Continued
(i) What steps can be taken to keep up to date with product changes and ensure that this
knowledge is properly disseminated?
Mark
Mortgage brokers need to be alert to any information regarding change from product providers, with
information being disseminated through such means as team meetings and seminars. Also, if
necessary, training programs should be put in place to ensure that changes are properly
understood.Subscribe to online news letters such as Mortgage Choice, ING
Direct, Brokernews.com.au etc. All up to date news on product changes can be e-mailed to all staff
then presented at meetings. Brokers should also be prepared to discuss the different products with
theirs clients and point out their different features so that an informed choice can be made.
/2
(j) What are the procedures for dealing with client complaints in your organisation?
Mark
- Listen to the complaint.
- Accept ownership of the problem.
- Be understanding. Remember, the person is complaining about your business, not about
you personally.
- Record the complaint. Make sure you have all the facts.
- Discuss options for fixing the problem.
- Keep your promises.
- Be quick and Follow up regularly.
/2
(k) What normal protocols should for protecting the confidentiality of client files?
Mark
All client information is confidential, all client records will be stored in a secure environment at all
times. Only authorised staff will have controlled access to client information/records. Client records
are the property of the organisation, but clients may have supervised access to their own records
following written a request, either by mail or electronically, and authorisation by the general
manager, independent living services.
/2
Sub-total /6
Total /39
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Task 3: Contribute to OHS Hazard Identification & Risk Assessment
3. Contribute
to workplace
hazard
identificatio
n
Occupational health and safety hazards are often considered only in terms of
physical injury, perhaps the result of working with heavy machinery, working in an
excessively noisy environment, or slipping or falling. Just as relevant, however, is
work-related stress. This describes the physical, mental and emotional
reactions of workers who perceive that their work demands exceed their
abilities and/or their resources (such as time, help/support) to do the work.
For the questions that follow, please read ‘Overview of Work-related Stress’
from the NSW Government. It may be found at:
http://www.safework.nsw.gov.au/__data/assets/pdf_file/0008/99233/SW08367-
1117-395314.pdf
Other ‘Tip Sheets’ from the same website may also be useful.
(a) How would you define workplace stress?
Mark
- Struggling to keep up or cope with Demands of the jobs within the workplace.
- Employees indicate that they are unable to have a say about the way they do their work
(lacking control).
- Employees indicate that they are subject to unacceptable behaviors at work especially
bullying.
- Employees indicate that the organization engages them frequently when undergoing an
organizational change.
/4
(b) Suggest at least two ways in which work-related stress may affect client relationships.
Mark
- Conflict may increase
- The quality of relationships may decline -client satisfaction may be reduced
/2
(c) Suggest at least four approaches you can take to reduce workplace stress? (Hint: you may
find suggested ways if you key ‘handling workplace stress’ into a search engine).
Mark
Track your Stressors - Keep a journal for a week or two to identify which situations create the most
stress and how you respond to them. Record your thoughts, feelings and information about the
environment, including the people and circumstances involved, the physical setting and how you
reacted
Notice-Keep an eye on your colleague’s mental health. Has there been a change in their behavior
or are they complaining more often than usual.
Be supportive-Keep an eye on your colleagues and be mindful of their workloads. Sometimes just
asking a co-worker if they need help will make them feel better and more supported by the team.
Develop Healthy Responses - Instead of attempting to fight stress with fast food or alcohol, do your
best to make healthy choices when you feel the tension rise. Exercise is a great stress-buster.
/4
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Take time to recharge- To avoid the negative effects of chronic stress and burnout, we need time to
replenish and return to our pre-stress level of functioning. This recovery process requires “switching
off” from work by having periods of time when you are neither engaging in work-related activities,
nor thinking about work.
Get some support - Accepting help from trusted friends and family members can improve your
ability to manage stress. Your employer may also have stress management resources available
through an employee assistance program, including online information, available counseling and
referral to mental health professionals, if needed
Sub-total /10
Continued
Task 3: Contribute to OHS Hazard Identification & Risk
Assessment Continued
3.1 Gather
information
about
workplace
hazards
In assisting in the control of work-related hazards, you will need to be access
suitable information.
Please read ‘Glossary of Job Demands and Job Resources’ from the QUT/ANU
People at Work project. It may be found here:
http://web.archive.org/web/20150227212940/http://
www.peopleatworkproject.com.au/LiteratureRetrieve.aspx?ID=174670
(a) Explain the distinction between ‘job demands’ and ‘job resources’ risk factors.
Mark
Job demand is the extent to which the environment has certain stimuli that essentially require attention and
response. It is seen that demands are the things that have to be completed. Job demands have been the
psychological, physical, social or the organizational elements of the job that need sustained physical
effort and hence related with certain physiological expenses.
Job resources addresses to those psychological, physicaland communal or the organizational elements of
the job that looks to reduce the demand for the jobs and the related costs, stimulate the personal
development, learnings and growth and even are functional in attaining the work objectives.
/4
(b) Identify two ‘job demands’ risk factors that are relevant to your workplace and describe what
detrimental effect they might have.
No. Mark
1. Health risk: These are the risks associates to the health issues related to the employees and this can
have adverse impact on the operational activities of the company.
/ 2
2. Occupational Risks: This relates to the risk that takes place due to the operational activities that takes
place in the company and therefore these risks need to be mitigated in order to maintain
effective performance of the company.
/ 2
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