Mortgage Choice Compliance Report: Policies, Procedures, and Audits

Desklib provides past papers and solved assignments. This report analyzes Mortgage Choice's compliance.

COMPLIANCE
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Introduction:
Mortgage Choice is a public listed company of Australia established in 1992. Its headquarters is
in Sydney and is a member of Franchise Council of Australia and Mortgage and Finance
Association of Australia. ASIC has issued a credit license to the Mortgage Choice. It also owns a
license of a financial planner. Mortgage Choice deals with various services such as risk and
general insurance, home loan products, commercial loans, deposit bonds, etc. The report will
include various compliances and policies followed by the company. It also includes procedures
of making amendments in the policies of the company according to the modifications made by
the government.
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Compliance and its roles
Compliance refers to ensuring that the company follows certain policies, rules, and regulations as
imposed by the legal authorities and the government of the country. The Mortgage Choice
performs its business activities in accordance with the compliance regulated by the industry and
the government for the same industry. It abides with all the laws, rules and policies (Grimm, et.
al., 2016).
Compliance framework
Mortgage Choice complies with all the internal policies and procedures, risk treatments, rules
and regulations, and contractual agreements. It conducts its business with a code of conduct. It
commits that the company will promote a compliance culture, enhances the image of the
company, performs all the functions with honesty, fairly, ethically, and according to the
compliance of the law.
The Mortgage Choice aims to build a culture of compliance by providing training to the staff,
forming a team who will be responsible for managing the compliance in the company,
supporting various systems, etc. The company has made a contract with QED Risk Services so as
to ensure that it is complying with the NCCP Act and ASIC by conducting quarterly audits
(Travis-Johnson, 2018).
The policies, regulations, laws, and rules followed by the company include Code of
Conduct, Compliance Policy, Share Trading Policy, Market Disclosure Protocol, Diversity
Policy, Auditing, etc.
Assigning of the compliance tasks
The Board of the Company should identify the objectives and risks associated with the same. It
should also prepare a compliance program and include consequences of not abiding with the
program.
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Monitoring and Testing of the performance of the compliance
Testing of compliance can be done through the review program of compliance as conducted by
the Board of Directors. The compliance should be reported in the audit report as presented by the
auditor on a quarterly basis. The audit report includes topics which should be notified to the
relevant legal authority, any changes or modifications made in the compliance obligations,
details of the breach in the compliance, and details of the actions taken for the same to minimize
the non-compliance (Basten, et. al., 2018).
The breach of law or non-compliance by the company is considered when it does not apply:
 applicable laws,
 code of conduct,
 internal policies and procedures,
 a credit disclosure document,
 Business Australian Credit License.
Reporting to ASIC
The Board of Directors of the Mortgage Choice will file a certificate of compliance to the ASIC
within 45days of obtaining the Australian Credit License. The Mortgage Choice conducts a
quarterly audit to test the compliances within the company and take corrective measures to make
relevant changes so as to comply with the policies (Menzies, 2015).
Has the appropriate policies
Mortgage Choice performs its business activities by complying with various policies and
procedures. It abides with all the rules and regulations imposed by the government. The
Mortgage Choice develops its compliance procedure in accordance with the AS-3806:2006
Compliance Program Standard. The Compliance Program Standard denotes several principles
which the company takes into consideration. It is important and necessary for the companies to
be highly regulated by establishing and developing the compliance program as it helps in
prevention and detection of any improper conduct and encourages adherence to the ethical and
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legal obligations. There are five such principles for the same. These principles are based on
commitment (Goltz, et. al., 2017).
Principle 1: This Principle explains the commitment made by the top executives and the
governing body of the Mortgage Choice in relation to the compliance effectively being implied
in the company. The Principle states that if the higher authorities of the company will comply
with all the legal provisions, the lower subordinates will also follow the same. The commitment
level can be determined by the degree which:
(1) The CEO of the company is responsible to ensure that the company as a whole realizes
the commitment.
(2) The compliance manager in order to confirm effective compliance in the company should
be given a senior position.
(3) The commitment should be stated and communicated clearly through the convincing
statements which are being supported by the actions.
(4) The compliance program is reviewed and monitored on a regular basis.
Principle 2: This principle focuses on the compliance policy of the Mortgage Choice which
includes the strategy and objectives of the company and is inscribed by the governing body. The
policy must contain the commitment towards the compliance, scope of the program, application
of the program in relation to the nature and size of the company, persons responsible for
managing, maintaining and reporting the compliances, required practices, code of conduct, and
consequences of non-compliance. The policy should be formed so that it brings a commitment to
the actions of the activities and helps in achieving compliance. The policy should be in
accordance with the activities Mortgage Choice performs and products or services it offers.
Principle 3: According to this principle optimum resources are being allocated for the
development, implementation, maintenance, and improvement of the compliance program. It is
the responsibility of the top executives to make sure that optimum resources are being provided
for the development of the compliance program and ensure that the program achieves the
objectives of the Mortgage Choice. The resources required for the development of the
compliance program are financial and physical (human) resources inclusive of specialized skills,
gaining external guidance, technology, organizational infrastructure, etc. The middle-level
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employees and the lower level employees should abide by the principles as imposed by the
higher management. The resource allocation should also include the allowance of sufficient time
for the employees to conduct compliance requirements.
Principle 4: This principle states that the strategy and the objectives mentioned in the
compliance program are inscribed by the higher authorities and governing bodies. The Mortgage
Choice should decide the objectives which are in the compliance program so as to fulfill the
commitments. The objectives in the compliance program should be aligned with the strategic
objectives. The objectives should be time-bound, measurable, and consists of the performance
required to achieve the same. The strategies should be documented so that the compliance
program can be established. The strategies should be in accordance with the principles in the
standard. The strategy must include:
 Structure of the compliance program,
 Priorities set for the same,
 Compliance obligations for policies and procedures.
Principle 5: This principle relates to the obligations of the compliance and includes that these
obligations are being identified and assessed. The company should identify the obligations and
ways it affects the products and services offered by the Mortgage Choice. The compliance
obligations should be documented that it is appropriate to its complexity, operations, size, and
structure. The compliance obligations have several sources such as:
(1) Directives,
(2) Code of Practice,
(3) Common law,
(4) Orders issued by the regulatory bodies,
(5) Judgments passed by the courts,
(6) Customary law,
(7) Organizational requirements,
(8) Licenses, permits, etc.,
(9) Environmental commitments,
(10) Protocols, treaties, and conventions,
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(11) Agreement with the customers and public authorities,
(12) Industry codes and practices,
(13) Agreements with non-governmental organizations or community groups (Wadhwa,
2017).
Has a documented schedule (quarterly) to test itself against the policies
The Mortgage Choice conducts quarterly audits to test its policies and made modifications as
necessary. It is the responsibility of the Board of Directors to conduct the audit and ensure that
the company is conducting its business operations in accordance with the compliances, policies,
and standards formed by the company. The company conducts the testing and analysis and
evaluates to gather the information about the areas in which compliances are not being followed
and prepares a report for the same (Brown, et. al., 2015).
Documents the testing results
The Board of Directors will file the audit report with the Australian Securities and Investments
Commission to ensure the compliances in the company. This will help in taking corrective
actions in regard to the effective compliance program. The Board will ensure that the company
abides with all the policies, rules, and compliances as imposed by not only the government of
Australia but also by the same industry. The outcomes of the testing are being reported and
corrective actions are taken to improve compliance procedure in the company.
Takes any necessary actions arising out of the results
 The changes should be made in the policies, objectives, set targets, structure, systems,
and personnel.
 Continuous improvement plan should be followed and modifications should be made in
accordance with the changes made by the government.
 Changes should be made in the compliance process so as to promote effective integration
along with the operational practices and systems.
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Conclusion
From the above report it is concluded that though Mortgage Choice abides with several policies,
procedures, practices, and standards, it still needs to make continuous amendments in its policies
in accordance to the changes made by the government relating to the products, services, policies
Mortgage Choice offers and follows. The company follows several principles as formed under
Compliance Program Standards and conducts its business ethically and legally.
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References
1) Grimm, J. H., Hofstetter, J. S., & Sarkis, J. (2016). Exploring sub-suppliers' compliance
with corporate sustainability standards. Journal of Cleaner Production, 112, 1971-1984.
2) Travis-Johnson, C. (2018). Mortgage Regulations and Compliance Strategies.
3) Basten, C., Guin, B., & Koch, C. (2018). How do banks and households manage interest
rate risk? Evidence from mortgage applications and banks’ responses.
4) Menzies, G. (2015). Re: CIFR Feedback for ASIC Capability Review.
5) Goltz, N., & Mayo, M. (2017). Enhancing regulatory compliance by using artificial
intelligence text mining to identify penalty clauses in legislation.
6) Wadhwa, R. S. (2017). Legal requirements process for compliance and risk assessment
using axiomatic design.
7) Brown, M., & Guin, B. (2015). The Exposure of Mortgage Borrowers to Interest Rate
Risk and House Price Risk—Evidence from Swiss Loan Application Data. Swiss Journal
of Economics and Statistics, 151(2), 89-123.
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