Case study 1 - Andrew and Stephanie Wilson

Task 1 - Initial disclosures

Following a personal introduction, and before you begin gathering information about the clients' existing financial situation or needs, there are certain disclosures you are required to make as a finance broker regarding the way you are remunerated and the range and limitation of your services.

Identify and describe three (3) of these disclosures.

Task 2 - Gathering and documenting client information

Complete the Client Information Collection Toolusing the information provided in the case study,

Task 3 - Assessing the clients' situation

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), provide an assessment of the clients' borrowing ability and ability to service the loan they require.

Consider and comment on issues such as:

• borrowing ability in relation to the loan required
• deposit requirements for the loan required
• repayment ability based on the loan required
• likelihood that the clients will be able to meet their financial obligations
• do they require Lenders Mortgage Insurance (LMI), and if so, how much will it cost
• any other issues that may impact, now or in the future, on the clients' ability to meet their obligations, including any possible risks.

Task 4 - 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 is ‘not unsuitable' for the borrower.

Identify and describe the key factors that must be taken into consideration when assessing whether a credit facility is ‘not unsuitable' for a borrower.

Task 5 - 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.

Task 6 - Prepare your recommendation

a. Based on the information presented in the case study, prepare a written professional proposal to your clients.

The style and language used in the proposal should be appropriate to the case study client's level of understanding. It should be clear and concise, and written in language that is easy to understand, while still remaining professional in its presentation.

You may base your response to this part of the assignment on either your knowledge of the products currently offered by your own organisation, orthe products offered by a lender you have researched.

In your proposal, you should include:

• a summary of your understanding of the clients' needs
• a summary of their current financial position
• the product options you have considered to meet their needs
• the option you recommend and the reasons for the recommendation. Explain how the recommended product meets the clients' needs
• disclosures applicable to the situation (a summary of likely applicable disclosures is adequate). Consider disclosures that are required by both legislation and by lenders codes of practice.

Task 7 - Advising on strategies

Following the presentation of your proposal, Andrew and Stephanie say that they would like your advice regarding strategies that will help them to pay down their home loan as quickly as possible.

• List strategies or methods that will help them achieve their aim.

Provide the advantages and disadvantages of each.

Task 8 - Settlement

Outline in detail the steps a Lender should take in order to document, settle and administer this application, post-approval.

Case study - Natalie

Task 9 - Establishing level of financial knowledge

What communication skills might you use to establish and confirm Natalie's level of knowledge about credit and finance and to establish her needs?

Task 10 - Offering financial options

a). Suggest two suitable types of credit optionsfor Natalie.

b). Explain why you have chosen these credit options, and provide a comparison of the two.

c). Recommendone of the options, with your reasons for the recommendation.

Task 11 - Explaining financial options

a). Provide a simple explanation of the difference between a secured loan and unsecured loanto Natalie for the purpose of her loan.

b). Explain the implications of taking out a secured loan.

Task 12 - Explaining finance costs

a). Provide Natalie with a summary of potential fees and charges, (both inside and outside of the comparison rate), that might be applicable to the credit option you have suggested.

b). Explain how she can compare the real cost of loans offered by different credit providers.

c). Explain why your suggestion is likely to provide an indication of the real cost.

Task 13 - Impact of credit history

Natalie tells you that her former partner failed to properly meet their unsecured personal loan debt obligations before they separated. Although Natalie eventually repaid the debt she is afraid that this incident may count against her when she applies for a loan.

What would you advise Natalie about:

a). The records kept by credit reporting agencies (please include at least two major credit agencies)?

b). the procedure and cost involved in obtaining a copy of her credit file?

c). The accuracy of records?

d). The impact of credit history including the legal obligations of Lenders?and

e). Her rights?

Personal development action plan

Task 14 - Developing the action plan

You are required to develop a personal development action plan. To develop the plan you need to:

• assess your current situation
• look at where you want to be in the future, in terms of your professional career
• determine how to get where you want to be, both in the short term and in the long term.