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Mortgage Broking

Assignment Requirements
 
Assessment cover sheet
Your assessment tasks must be uploaded in an electronic format i.e. Word, Excel, PDF or Scan. Please see the step-by-step instructions in your Member Area on how to upload assessments.

Student details

Course name:
FNS50311 Diploma of Finance and Mortgage Broking Management UPGRADE
Assessment name:
Loan Products & Settlement Assessment

Surname:
Given name:

Address:
Postcode:

Email:

Phone (work):
Phone (home):

Current occupation:

Industry:
Length of service in industry:

 
 
Checklist of attachments:
TASK 1
Option A– Application for National Recognition OR
Option B – Research
TASK 2
Option A – Application for National Recognition OR
Option B – Research
Please indicate style of course undertaken:
Correspondence                                        Online Face to face      Trainer’s name:
Once your assessment has been successfully uploaded it will be pending review with your nominated course assessor. Your assessor will mark your assessment and you will receive an email advising you if you have been assessed as satisfactory. If you are marked as not yet satisfactory you will be contacted and asked to provide additional information or re-visit the assessment and re-upload your amended case study or written tasks.
TASK 1 – Application for National Recognition
You may have already received competency for:
FNSFMB501A Settle applications and loan arrangements in the finance and mortgage broking industry (FNS10 Financial Services Training Package) or FNSFBRK501B Settle applications and loan arrangements in the finance and mortgage broking industry (FNS04 Financial Services Training Package).

If you are competent in FNSFMB501A or FNSFBRK501B, then you need to complete TASK 1, OPTION A – Application for National Recognition. Upload this along with supporting documentation to receive National Recognition for these units.
If you have not attained either one or both of the above units of competency, please complete TASK 1, OPTION B – Completing Residential Mortgage Customer File

OPTION A – Application for National Recognition

NAME (
BLOCK LETTERS):

ADDRESS:

POSTCODE:

TELEPHONE:
FAX:
MOBILE:

COURSE NAME: FNS50311 Diploma of Finance & Mortgage Broking Management (Upgrade)

Units of competency for National Recognition:

FNS04
Unit code
FNS10/11
Unit code
Unit name

FNSFBRK501B
FNSFMB501A
Settle applications and loan arrangements in the finance and mortgage broking industry

I have read the National Recognition Policy and understand that if this application is successful that I will be given automatic exemption in the relevant units of competency as detailed above. I understand that I will only receive automatic exemption for these units upon successful submission of a statement of attainment for each unit.
OPTION B – Research
As a result of your client interview, completing relevant client documents and loan application for the lender; you are now required to complete the remainder of customer file supporting several of your obligations and responsibilities as a Finance Broker. These important steps being the approval process, documentation, settlement and ongoing relationship management. In areas where you do not have copies of actual supporting documentation, insert a page with the name of the document, an explanation of the document and its purpose. You would include e.g. copy of formal/unconditional approval stating conditions of settlement.
There are a number of templates in the Member’s Area under ‘Useful Resources’ that you could use in your submission.
You are required to submit your customer as determined by the chosen case study. Therefore your file information must contain the following:
Students must provide fully completed Interview notes with client as below.

Adding to your Interview Notes – Customer Contact Sheet/Record

You should have already documenting regular communication pre your loan submission. These interview notes incorporate all the correspondence from initial contact to loan preparation and submission. You are now required to provide interview notes from loan submission to post loan application process; with all parties specifically including:
–     Customer
–     Bank/s
–     Referrer/s
–     Government bodies, i.e. Stamp Duty, FHOG
–     Property Valuators
–     Settlement Agent
Students must provide evidence of loan approval as below.

Advice of Loan Approval

Evidence of communication with customer and other relevant parties regarding:
–     Communication of formal/unconditional approval to customer i.e. lender letter of offer;
–     Letter to client regarding documentation/settlement expectations;
–     Communication with Real Estate Agent, Settlement Agent, etc.
Students must provide document sign up as below.

Document Sign-Up/Settlement Preparation

–      Document sign-up checklist and covering letter /communication;
–      Correctly signed mortgage documents;
–      Insurance details;
–      Authority to disburse funds;
–      Settlement checklist.
Students must submit advice of settlement as per below

Advice of Transaction Completed/Finalised

–      Communication of successful settlement;
–      Letter/survey to client asking for client satisfaction feedback on services/support provided. You may wish to ask for referral to friends and family.
 
Assessment cover sheet
Your assessment tasks must be uploaded in an electronic format i.e. Word, Excel, PDF or Scan. Please see the step-by-step instructions in your Member Area on how to upload assessments.

Student details

Course name: 
Assessment name:
Complex Lending Assessment

Surname:
Given name:

Address:
Postcode:

Email:

Phone (work):
Phone (home):

Current occupation:

Industry:
Length of service in industry:

 
 
Checklist of attachments:
TASK 1 – Role play and supporting documentation
TASK 2 – Case Study submissions and supporting documentation
Please indicate style of course undertaken:
Correspondence         Online   Face to face – Trainer’s name:
Once your assessment has been successfully uploaded it will be pending review with your nominated course assessor. Your assessor will mark your assessment and you will receive an email advising you if you have been assessed as satisfactory. If you are marked as not yet satisfactory you will be contacted and asked to provide additional information or re-visit the assessment and re-upload your amended case study or written tasks.

ASSESSMENT TASKS
The assessment tasks contained herewith; relate to the following units of competency:

FNSFMB502A Identify and develop complex broking options for client
FNSFMB503A Present broking options to client with complex needs
FNSFMB504A Implement complex loan structures

IMPORTANTNOTE: AAMC Training only wants to see your own work.Pleasedonotupload blank assessment tasksorinstructionsonhowtocomplete same.Whenthisextrainformationisuploaded itpresentsunnecessaryworkfortheassessorsandinturndelaysourassessmentresponses.
Task 1: Role Play – Student skills identification
The following role play must be conducted to further determine your skills and knowledge in dealing effectively with clients’ complex broking needs. The observer must act as your chosen clients and you will be asked to explain certain parts of the application process. You must endeavour to establish rapport with the client (observer). You may also wish to write your answers down and rehearse prior to completing the role play. It is important to be prepared.

You may contact the college to make arrangements to assist with conducting the role play, or
You may arrange for an Observer/Third Party Declarer to be your “client”.

Please note that the Observer/Third Party Declarer should only comment on criteria where they have directly witnessed you performing competently during the role play. Therefore you should not expect them to make assumptions about your competence. Do not pressure a third party to sign a supporting statement if she/he has not had the chance to observe your role play.
Submit the competency checklists duly signed by your Observer/Third Party Declarer and their supporting qualifications/resume for the role play you have undertaken.
 
 

INFORMATION FOR OBSERVER/THIRD PARTY DECLARER
The candidate is seeking a supporting statement from you as part of the evidence they are compiling in order to complete the requirements for a vocational education qualification. You are to act as the client mentioned in the chosen case study. You will be assessing the candidate based both on their clear explanation of the questions and ability to build rapport with the client. Feedback comments for each point are required.
The Observer/Third Party Declarer must be someone who possesses sound financial services industry (credit activities such as finance/mortgage broking) experience/knowledge in order to provide support to you during the role play. It is also important that the declarer has a good understanding of current industry legislation and procedures relating to:

Providing finance and/or mortgage broking services in credit activities
Presenting broking options to clients
Develop and nurture relationships

The Observer/Declarer may be one of the following and will be required to signify the finance/mortgage broking experience achieved and/or the qualifications held on the Skills Assessment (Role Play) form:

A holder of a Diploma of Finance and Mortgage Broking Management (or higher) qualification
An Accountant/Financial Planner with credit activity experience
An Australian Credit Licence holder/ Responsible Manager for an ACLH
A Business Development Manager with a Bank, Building Society or Credit Union involved in Third Party (Broker) lending.
A nominated Mentor with the appropriate authorisation from an industry association or ASIC.

The candidate is seeking a Supporting Statement from you as part of the evidence they are compiling in order to complete the requirements for a vocational education qualification.  You are to act as the “client” mentioned in the chosen case study. You will be assessing the candidate based both on their clear explanation of the questions and ability to build rapport with the client. Feedback comments for each point are required.
A copy of your qualification/resume is required, along with a short detail of your industy experience.
 
Skills Assessment Form

Participant’s name:

Performance criteria to be addressed
S/
NYS
Comments (you may use an additional sheet)

Introduce yourself to the client and explain the finance and mortgage broking process to the client in a clear and unambiguous way, avoiding jargon with the background, credentials and role of the broker clarified to build rapport.Explain the services, values and capacity of the organisation/your business to the client including procedures for complaints handling and resolution (Refer to Credit Guide).
Seek consent from the client that they are happy to proceed with utilising your services.

Determine client’s existing financial situation focusing on complex requirements and using active listening and questioning.Explain the purpose and requirement of collecting personal information from the clients to begin determining their personal and financial situation and requirements. Ask the client for their consent to collect and use this information (via privacy consent form).

Explain to the client why it is important to review all information above to ensure suitable products are presented/recommended (preliminary assessment).

Present product/s and features of the product to the client from your selected options in the case study. It is your responsibility to guide the client through broking options and the impact of each option clearly and comprehensively discussed including advantages, disadvantages, risks, financial and taxation implications. Take into account various assumptions and possibilities.Ensure all fees, charges and commissions are clearly explained.
Ask the client the following questions:

Are they capable of understanding the complexity of the transaction and steps involved in the process?
Explain why this is important?
Do they have any other special needs to be considered?

Please discuss with the client Risk issues and Tolerance comprehensively and ethically, including unusual risks or requirements, and interdependencies and implicationsExplain to client Risks to their or organisation and their impact according to company policy, guidelines and relevant legislation.

Please clarify with the client any further concerns and/or issues. Confirm with the client when and how you will be corresponding with them throughout the process/ transaction. Explain that you will also liaise with all parties to the loan including the accountant, financial planner and solicitor as appropriate to ensure the correct structure and any risks and /or complex issues are addressed. Ensure any commercial relationship of the representative and their organisation to products and services mentioned in the plan are disclosed.Explain/discuss/agree on implementation actions (gain commitment to proceed and liaise with third parties as mentioned)

S = Satisfactory NYS = Not Yet Satisfactory. If you deem the student to be Not Yet Satisfactory, please arrange to repeat the assessment.  Should you have any concerns please contact AAMC Training +61 8 9344 4088.
An AAMC Training assessor may contact the Third Party Referrer to review and discuss this process.
 
 

Additional observer/third party declarer comments:

Did the finance broker act professionally and in accordance with legislative, regulatory and professional codes of practice?
YesNo

Did the finance broker establish the client’s needs by using questioning and active listening, apply a good level of communication, negotiation, interpersonal and relationship management skills?
YesNo

Did the finance broker present the information clearly, effectively and unambiguously (no use of jargon), with recommendations comprehensively discussed and negotiated?
YesNo

Did the broker consider any special needs of the client including cultural, language, race, religion, ethnic origin, socioeconomic status and demographic needs?
YesNo

Did the broker explain all risk issues comprehensively and ethically with the client?
YesNo

Observer/Third party declarer details

Title
Mr Mrs   Ms   Miss   Other:

Name:

Address:

Suburb:

Postcode:

Phone (Mobile):

Phone (W):

Email:

Relationship to student

SELECT ONE OF THE OPTIONS WHICH REFLECTS YOUR
EXPERIENCE/
QUALIFICATION: 
Please provide a copy of your qualification, resume or mentor authorisation as you specified.
A holder of a Diploma of Finance and Mortgage Broking Management or higher
Certificate attached

An Accountant/Financial Planner with Credit activity experience
Resume attached

An Australian Credit Licence Holder and/or a Responsible Manager for an Australian Credit Licence Holder
Resume attached

A Business Development Manager with a Bank, Building Society or Credit Union involved in Third Party (Broker) lending (Consumer or Commercial)
Resume attached

A nominated Mentor with the appropriate authorization from an industry association or ASIC
Mentor authorisation

Observer/declarer feedback
Did you feel you were given enough information and supported through the process of undergoing this assessment?
Yes No

Did you feel the resources provided were suitable for your workplace?
Yes No

Do you think the assessment was relevant to this particular qualification’s training needs?
Yes No

The information and comments provided above are true and correct.
Observer/Third party declarer signature    ……………………………………………………….Date     ……………………………………….

TASK 2 – CASE STUDY
Overview
In order to achieve competence, you will need to demonstrate a clear understanding of complex loan scenario’s by completing three assessment tasks. These tasks will demonstrate to the assessor whether you are competent at Diploma level; they will also demonstrate your understanding of the complexities of various loan scenarios and the outcome for your clients.
The requirements for this task is to prepare a submission for assessment in 2 parts.

Part 1 – Fully completed set of NCCP Act Compliance documents including related interview and diary notes.
Part 2 – Fully completed loan submission to the lender/s of your clients’ choice. Please also note at this stage we have options for you to choose given the industry area you are currently servicing e.g. Investment property loan, Commercial/Business Loan, Self-Managed Superfund Loan or a Plant and Equipment loan. You make the choice but all required documents no matter what case study you select must be enclosed.

Please ensure the following documents and processes are included in your client and loan submissions in the following order:
Submission Part 1

A completed Fact Find/Client Needs Review (Business) form which has allowed you to review and research your client’s information.
A client signed Privacy Consent form to exchange personal information with other third parties. Because of the variances in the make-up of a number of the compliance forms used by the industry, this authority may already be included in the Credit Guide or other such compliance documents. At the end of the day, they all have the same meaning and intent.

A completed Statement of Credit Advice or a Credit Quote or a Credit Proposal Disclosure Document which you have presented to your clients’ with the recommendation of a lender. Your recommendation will in all probability provide the solution the clients are seeking. It should be in the appropriate format that the clients will easily understand. This document also serves as your authority to proceed with the lodgement of the loan application.

Complete Preliminary Assessment Checklist
Completed Credit Quote
Provide a completed Compliance Checklist
You must be satisfied that you have outlined the process that is required for the client to obtain appropriate finance and the risks (potential and real) of which your client should be aware.

 

Submission Part 2
A completed Assessment Cover Sheet in which you acknowledge the submission is all your own work.
A fully completed loan application which will contain all documentary financial evidence to support the application such as:

Financial Statements, Tax Returns, Trust deeds etc.
Cash Flow Forecasts
Offer and Acceptance or Contract of Sale for any purchase of real estate/ Invoice or Offer to Purchase from a supplier for Plant and Equipment
Evidence of any other debt your clients may have which allows a serviceability to be completed with all available facts.
A Serviceability Assessment to show clients can afford the loan requested.
Notes to the lender addressing the points as listed in line with the course notes titled lenders submission lender notes.e.g.
Applicants’ details including history and needs
Purpose of loan
Brief details and value of security
Brief details of loan make-up
Loan amount requirement
A SWOT analysis – refer to appendices for template of this document, you should also refer the results of your analysis in your notes to the lender.
A Financial Ratio Analysis – A minimum of one or more if appropriate to be completed and the results mitigated/supported in your notes to the lender
Reasons for major variations in the 2 years financial statements included in this assessment.

PLEASE NOTE:The SWOT and Financial Ratio analyses along with the reasons for variances will have to be submitted to the college as attachments that would normally be provided in the Notes to the Lender.
What we are asking for here is an application that you would send to the lender. Whilst you would not normally include in your submitted lenders file the Clients Needs Review/Fact Find, Statement of Credit Advice/Client credit quote you need to maintain them on the clients file for audit purposes and we need to verify them for assessment purpose.
 
Evidence requirements
In order to be deemed competent, you will need to evidence the ability to:

Develop detailed broking options designed to maximise the client’s outcomes and reach client objectives which incorporate elements from research and which address complex needs and issues
Identify and describe key assumptions upon which the plan is based
Provide a detailed analysis of research strategies and findings
Test and make appropriate checks on a proposed plan for its integrity and compliance
Assess the impacts of taxation, social security, economic and other government policies on client investment and financial requirements taking care not to provide financial advice unless licensed to do so
Interpret and comply with industry regulations and codes of practice
Identify the roles of associated financial advisers and work effectively with them
Identify and document the situations where the client/s should be referred to an associated financial advisor for professional advice
Assess broking options, financial markets and investment characteristics
Use appropriate sales and marketing methodologies and provide justification and research evidence
Gain client feedback on and/or agreement to the plan
Prepare materials and personnel to effectively implement complex loan structures
Establish appropriate audit trails and effectively document records, diary notes and data
Demonstrate that effective and appropriate follow up and feedback systems are in place to track progress of the loan application and to keep client/s informed

Knowledge requirements
To be deemed competent you must be able to demonstrate a comprehensive knowledge of:

Acts and regulations affecting the financial industry
Legislation impacting on financial services, including environmental, corporations and consumer legislation and State and Territory legislation, charges and taxes
Relevant codes of practice
NCCP Act disclosure requirements
The role of mortgage/finance brokers
Products available in the financial services industry
Sources of information on financing such as lenders, government departments, accountants, solicitors and financial planners
Methods of presenting financial data
Credit assessment
Risk Assessment
Valuation practices and methodology.

Preamble

The task is presented in the form of a case study around a complex Residential, Commercial, SMSF or Plant and Equipment lending scenario. It is your choice as to which loan option you select as a case study, provided however your submission meets the structured process we are seeking from you.
Whilst the traditional finance broker will look at the options via the traditional pathways of commercial and or investment property, please understand that (given Australia now ranks second in litigious actions) it would be wise to fully understand the client’s overall personal situation before making recommendations. It may even be more beneficial for the clients to place this transaction via their Self Managed Superannuation fund as that may produce a more tax effective solution for the client. Remember if you are not authorised to give advice in this area refer the client to one of your strategic advisors who is. The college provides qualification courses in this area.
Please ensure that you assess applicable fees and charges in line with requirements of the State/Territory in which you operate
The majority information to complete the case study is included in the scenario’s provided or within the Learning Guide
Some information has been deliberately excluded and you will be required to identify and document these items. This Case Study has been designed so that it can be written as a complex property investment loan, a self-managed superannuation loan, a business loan or plant and equipment loan. It is up to the individual to determine which type is best for the client.
It is recommended that you use your own NCCP Act document templates to complete Submission Part 1

 
INTERVIEW NOTES
CAST OF CHARACTERS
The People
Jason and Rebecca WhiteHusband and wife (Please refer to Personal Details Sheet)
Sara and Mark                  Dependant children (ages 10 and 8)
The Entities
Glossy White Pty Ltd        Trading Company for Painting
Owns Registered Business Name “Glossy White Painting”
Directors:        Jason and Rebecca White
Shareholders:Jason and Rebecca White (equal)
Employees:     Jason and Rebecca White, Martin Kelly (apprentice)
Shades of Whites Pty Ltd
as trustee for
White Unit Trust               Trading entity for Interior Design
Owns Registered Business Name “Shades of White”
Unit holders:   Jason White        50%
Rebecca White    50%
White Pty Ltd                   Non trading “Special Purpose” company as trustee for
White Superannuation Fund (SMSF)
White Superannuation Fund                     SMSF
Beneficiaries   Jason and Rebecca White
WHAT THEY TOLD YOU
Jason and Rebecca have been clients of yours since 2005. At that time you assisted them with a home loan from St George Bank to purchase their current owner occupied home. Home loan balance is $360,000 and a recent real estate agent appraisal of their home, located at 7 Park Lane in a good suburb in your State/Territory, estimates the market value to be $1m. . They are open to a refinance or restructure of this loan with their own bank or with any other lender if required.
Jason and Rebecca also have $257K each in their Self Managed Super Fund in cash.
Glossy White Paint has been operating since 2000. A couple of years ago Rebecca completed her interior design qualifications and Jason is a qualified painter.
The unit trust was set up by their accountant, who also provides a book-keeping service for them so that all the BAS and other accounting needs are met professionally.
They do not consult currently with a financial planner but they did say to you that their accountant has also been on to them about using the funds more effectively in their self managed superannuation fund. Their accountant is tied in with a Dealer Group and is also authorised to give advice in this area, hence his insistence on them discussing the $514K cash sitting in their SMSF. Rebecca mentions that referral for this type of service provided by a financial planner would be a good idea as a second opinion as well, plus they also need to sort out their insurances. She has asked for your recommendation of a suitable professional. Jason looks a little uncomfortable with this request. Your experience here tells you that you had better address his issues without delay, to avoid losing the referral to another Broker. You also know, from your experience in your role, that many Australians are under insured and many do not have wills in place. The clients are typical and express the opinion “Oh it won’t happen to us”. They do not want to admit their shortcomings in these two vitally important areas. Nor do they wish to admit the possibility of not earning an income, become ill or even worse die.
Please note:
Courts in Australia deem Finance Brokers to be professional and as such under the Duty of Care have a legal obligation to advise clients of the ramifications of financial hardship caused through illness, accident or death.
Rebecca is concerned about how they will meet interest costs until homes are completed and rented. She has asked you for options in this area.
THE DEAL
Choose one of the case studies to present for assessment purposes. Please remember to follow the structured process we have set out in the course manual.
You should also note that the correct selection must be made to suit clients’ best interest, not what you feel is necessary in your comfort zone. So remember, unless you have some understanding of all the available options the clients will be or maybe disadvantaged and seek restitution from yourself sometime in the future. We will not penalise you for any selection you make, we are only seeking to assess your ability to prepare the loan application and applicable forms etc. to meet the required standards for the loan you have selected for your clients.
Option 1- Can be structured as an investment property loan
Jason advises that they have located a derelict home on a large block of land in a nearby suburb that they would like to purchase with the aim of constructing three freestanding dwellings. These homes will be rented out upon completion. They hope to retain them for at least 20 years and then sell to help fund retirement or perhaps for the older kids to live in down the track. Their solicitor has advised that given block size it may be advisable to subdivide and for each home to have separate title. Property is a corner block.
A local real estate agent has stated that the rental returns would be slightly higher than suburb average, as the area is made up of much older homes. Capital growth could also be above average as the suburb is ideally placed for medium density development. Schools and shops are nearby. Transport infrastructure is a little lacking.
Property contract purchase price is $500,000.
The Builder’s tender is for a total of $600,000 and does not include demolition, site clearance or subdivision costs. Builder is licensed and reputable and project will be funded via progress payments. Separate quote provided for demolition and clearance of $50,000. Solicitor advises subdivision costs of approximately $25,000. Clients wish to borrow all of the project costs including lender, legal, government and any other charges and fees. Estimated completion date is in 6 months. Estimation is based on the completion valuation of $400,000 per property and rentals should be around $450 PW per unit.
Options 2 and 3 can be structured as either a commercial loan or a Self-Managed Superannuation Fund Loan
Clients are not sure which way they want to structure this loan and have come to you seeking your advice and guidance as they are now seeking to purchase stand-alone commercial premises to house their painting business and plant and equipment. They inspected a commercial property located at 3 John Street, your suburb which is the suburb next to where they live. Their children now need more space at the family home and hence they are seriously considering the need to move the business to either a rental property or look to purchase their own. They are keen to look at purchasing their own as they will also retain an asset that way. They will be paying rental in line with market value in that area which is relatively cheap for what they are getting at $700 per week. There will also be outgoings on the building of an estimated $5k a year.
They mention to you that their accountant has discussed setting up the Bear Trust if they wish to purchase commercial Property to house their business, if they choose to fund via through the SMSF vehicle.
Deal via Commercial or SMSF Borrowings
Purchase Price   $750K made up of:
GST                    $75K
Loan app fee       $7.5K
Stamp duty         $41K
Valuation etc.      $1.5K
Total                   $875K
LVR 70%             $525K
Security Commercial Funding- Family Home and Commercial Property
or
Security SMSF Borrowings- Commercial Property and SMSF Funds
Option 4- Can be structured as a plant and equipment loan
 
 
THE DETAIL
Personal details:

Mr Jason White and Mrs Rebecca White

Date:
1st December 20XX

Gross Income Y/E 06/XX
$95,000
Gross Income Y/E 06/XX
$95,000

 
 

Asset
values
$
Liabilities amount owing $
Monthly payments
$
Lender

Owner occupied residence
1,000,000
360,000
2,249
St George

Cash resources
125,000

Credit cards:

Limit $5,000 (swiped monthly) Jason

1,000
Nil
ANZ

Limit $10,000 (swiped monthly) Rebecca

3,000
Nil
St George

Furniture & personal effects
130,000

2009 Holden Commodore Jason
25,000

2010 Ford Focus Rebecca
15,000
10,000
300
ANZ

Vintage Motorbike Collection
80,000

White Superannuation Fund
514,000

Shares in Glossy White Pty Ltd
20,000

TOTALS
1,909,000
374,000
2,549

 
 
Glossy White Pty Ltd Trading as Glossy White Painting
ACN 12345678 / ABN 91 12345678
Profit and Loss Statement for the year ended 30 June 20XX

20XX
$
20XW
$

Income

Painting Income
522,665
616,508

Less Cost of Goods Sold

Purchases
51,187
83,075

Sub-Contractors
175,292
329,694

Plant Hire
598
614

Sub Total
227,077
413,383

Trading Profit                
295,588
203,125

Interest Received
1,139
627

Gross Profit                                                      
296,727
203,752

Expenses

Accountancy
4,380
2,180

Advertising
1,958
5,108

Apprentice Wages
15,000

Bank fees and charges
222
201

Computer expenses
692
275

Depreciation –   Plant and Equipment
1,245
937

                       Motor vehicles
8,031
9,894

Directors Salaries
190,000
150,000

Entertainment expenses

509

Filing fees
212
212

General expenses

369

Home office costs
1,473
1506

Insurance (business)
1,482
911

Insurance (workers comp)
8,726

Licence and Permits
200
76

Motor Vehicle expenses
3,801
6039

Postages
93
45

Printing & stationery
1
137

Repairs & maintenance
881

Staff amenities
390

Staff training
572

Subscriptions

192

Superannuation – Directors                                            
19,000
15,000

Superannuation – Other
1350

Telephone                                                          
3494

Travelling expenses
70

Uniform Expenses
30
818

Total expenses
263,303
194,409

 
 
 

Net profit from ordinary activities before income tax
33,424
9,343

 

Glossy White Pty Ltd Trading as Glossy White Painting
ACN 12345678 / ABN 91 12345678
Balance Sheet as at 30 June 20XX

20XX
$
20XW
$
20XV
$

CURRENT ASSETS
 

Cash assets

Cash at bank                                                      
8,258
6,524
11,965

ABC Bank Business Online Account
20,000
15,000
10,000

Cash on hand
20
20
20

Sub-total
28,278
21,544
21,985

Debtors
6,195
10,123
8,956

Stock
4,324
5,874
7,546

Sub-total
38,797
37,541
38,487

Fixed Assets
 

Plant and Equipment                                        
50,109
58,434
63,191

2009 Toyota Hilux Van
30,000
35,000
40,000

2009 Toyota Hilux Ute
22,873
31,477
40,000

Sub-total
102,982
124,911
143,191

TOTAL ASSETS
141,779
162,452
181,678

CURRENT LIABILITIES

Hire Purchase liability
13,603
13,603
13,603

ATO liability
5,013
5,583
3,254

GST payable
7,643
3,315
4,164

Sub-total
26,259
22,501
21,021

NON CURRENT LIABILITIES

Hire purchase liability                                        
39,270
52,874
66,477

Sub-total
39,720
52,874
66,477

TOTAL LIABILITIES
65,979
75,375
87,498

Share Capital
20,000
20,000
20,000

Retained Earnings
55,800
67,077
74,180

EQUITY
75,800
87,077
94,180

 

Financial statement explanations (1% Variance Rule)

Total Income (-93K)
Took family to Egypt for holidays in 20XX

Sub-contractors (-154K)
Reduced contractor work and replaced some with apprentice

Workers Comp Ins (+$8K)
Agreement made with subcontractors to cover premiums

Telephone (+$3.49K)
Treated as personal expense for some reason in 20XW

Fixed assets P & E (-$8.3K)
Progressive depreciation

Non-current liabilities HP (-$13.6K)
Natural reduction by way of monthly payments.

 
PLEASE DO NOT PHOTOCOPY THESE EXPLANATIONS AS YOU ARE REQUIRED TO INTERPRET THE EXPLANATIONS/COMMENTS IN YOUR OWN WORDS

Shades of White Pty Ltd as Trustee for White Unit Trust Trading as Shades of White
ACN 12345678 / ABN 91 87654321
Profit and Loss Statement for the year ended 30 June 20XX

 
20XX
$
20XW
$

Income

Interior Decorating Income
52,165
37,889

Interest Received
105
56

Gross Profit
52,270
37,945

Expenses

Accountancy
500
500

Advertising
750
600

Bank fees and charges
60
60

Computer expenses
330
330

Filing fees
212
212

General expenses

369

Home office costs
625
573

Insurance (business)
782
658

Licence and Permits
200
200

Motor Vehicle expenses
3750
3265

Postages
26
45

Printing & stationery
125
138

Subscriptions
800
192

Telephone
1200
937

Total expenses
9,360
8,079

Net profit from ordinary activities before income tax
42,910
29,866

Less Distributions to Unit Holders

Jason White
21,455
14,933

Rebecca White
21,455
14,933

Sub-total
42,910
29,866

Undistributed Income
0.00
0.00

 

Shades of White Pty Ltd as Trustee for White Unit Trust Trading as Shades of White
ACN 12345678 / ABN 91 87654321
Balance Sheet for the year ended 30 June 20XX
 

 
20XX
$
20XW
$

CURRENT ASSETS

Cash assets

Cash at bank
2,121
1,458

Sub-total
2,121
1,458

Fixed Assets

Sample Books
3,500
2,800

TOTAL ASSETS
5,621
4,258

CURRENT LIABILITIES

AMEX Charge Card
1,000
0.00

Sub-total
1,000
0.00

NON CURRENT LIABILITIES

Unit Holder Distributions
4,621
4,258

Sub-total
4,621
4,258

TOTAL LIABILITIES
5,621
4,258

Retained Earnings

EQUITY
0.00
0.00

 
 
 
 

Required documents highlighted in red

LENDER DOCUMENT CHECK LISTMORTGAGE (M) AND/OR
PLANT, EQUIPMENT, VEHICLE FINANCE/COMMERCIAL LENDING (PEVC)

Type
Data
Enclosed

M/PEVC
Credit Guide/Financial Services Credit Guide*
Y/N

M/PEVC
Authority to Act & Privacy Consent Form *
Y/N

M/PEVC
Authorised Credit Representative Profile*
Y/N

M/PEVC
Client Needs Review/Fact Find*
Y/N

M/PEVC
Costing sheet for fees and charges*
Y/N

M/PEVC
Lender Product Comparison sheet (at least two options)
Y/N

M/PEVC
Interview notes why lender and/or product was chosen*
Y/N

M/PEVC
Preliminary Assessment*
Y/N

M/PEVC
Credit Quote*
Y/N

M/PEVC
Credit Proposal (Disclosure) / Statement of Credit/Mortgage Advice*
Y/N

M/PEVC
Evidence of Income (Pay slips, Employers Letter, PAYG Summaries)
Y/N

M/PEVC
Copies of last two years Financial Statements and Tax Returns with annual variances explanation. If Borrower/s self-employed or company, with income worksheet
Y/N

M/PEVC
Signed Assets & Liabilities Statement (SOP)
Y/N

M/PEVC
Cash Flow Forecast
Y/N

M/PEVC
A serviceability worksheet for either PAYG or Self Employed clients
(if available) *
Y/N

PEVC
Copy of Offer to Purchase / Suppliers Invoice (Showing serial numbers etc. to identify goods
Y/N

M
Copy of Offer & Acceptance or Contract of Sale
Y/N

M
Copy of Council approved plans (Development loans)
Y/N

M
Fixed Priced Building Contract
Y/N

PEVC
Copy of Motor Vehicle Registration Papers
Y/N

PEVC
Private Sale Documents
Y/N

M/PEVC
Copy of Broking Commission Tax Invoice
Y/N

M/PEVC
Evidence of current or other lenders’ Good Conduct statements
Y/N

M/PEVC
Evidence of savings or deposit (trade-in) for contribution to loan
Y/N

PEVC
Landlord’s Waiver
Y/N

M/PEVC
Fully completed Loan Application
Y/N

M/PEVC
Notes to Lender detailing your comments on the client’s background and requirements *
Y/N

M/PEVC
Lender Document Check List (Normally in loan application document)
Y/N

M/PEVC
Anti Money Laundering/Counter Terrorism Financing ID requirements *
Y/N

M/PEVC
Copy of Business Registration & Constitution and/or Trust Deed
Y/N

M/PEVC
Credit Guide/Financial Services Credit Guide*
Y/N

M/PEVC
Authority to Act & Privacy Consent Form *
Y/N

* A sample of the forms mentioned above can be found in the AAMC Members’ Area under “Useful Resources” (www.aamctraining.edu.au)

A sample of the forms mentioned below can be found in the AAMC Members’ Area under “Useful Resources” (www.aamctraining.edu.au)

Financial Services Credit Guide/Credit Guide

Along with the ACR’s profile this guide is handed to the clients at initial interview and it sets out the services that are offered along with the Privacy Policy of that organisation and the complaints procedure.

Authority to Act & Privacy Consent Form

The authority to act allows the finance broker to act on behalf of the client when dealing with the lender and other related parties to loan. The privacy consent form allows the finance broker to store and use relevant client information to assist in the loan application process without breaching privacy laws. This will most likely be contained in the credit proposal (mentioned below).

Authorised Credit Representative profile

This form is which sets out the Authorised Credit Representative’s profile and authority to act on behalf of a credit licence holder and what products the ACR can introduce to under that authority. At initial interview the clients must be handed a copy. This may be an addendum to the Credit Guide.

Data Collection – Business or Personal Consumer Client Needs Review/fact Find

By using a Client Needs Review/Fact Find you will have all the information required to form an opinion as to what type of loan best suits the clients’ requirements. At the same time you are acting with due diligence in asking the clients questions about their financial security in the event of an unforeseen circumstance that causes financial hardship. You have a legal obligation to yourself and the clients to make them aware of the ramifications of an unexpected illness, accident or even death. By signing a Client Needs Review they can accept your offer of a referral to an insurance professional or alternatively decline your recommendation, thereby you have documentary evidence of your professionalism. You do not have to sell Risk Products but you have complied with the requirements under the Duty of Care by having adopted the above actions.

Costing sheet for fees and charges

Estimate of total fees and charges payable to the financier in relation to applying for the finance will form part of the credit proposal. However the broker may want to complete a cost analysis to determine savings or equity versus costs associated with the purchase and finance. This is not a requirement of the submission but may rather be a process you may want to adopt for purchases.

Interview notes

A file copy of your interview notes will go a long way to avoid any adverse opinions from any audit that may be undertaken by any aggregator company or ASIC official. Whilst documents required under NCC such as a fact find/client needs review, preliminary assessment and credit proposal will highlight requirements and recommendations they may cover all conversations/ time lines between the broker and client.

Preliminary Assessment

Based upon your enquiries as to the financial situation, requirements and objectives of your client you are required to conduct a preliminary assessment to determine whether the proposed credit contract/lease is ‘not unsuitable’ for the client. This must be done prior to suggesting the client applies for, or providing assistance applying for a particular credit contract.

Credit Quote and Credit Proposal Documents

These forms may be incorporate into the one document. The Credit Quote outlines the maximum fees and charges payable to the credit representative and licensee for credit assistance. Must be provided before credit assistance is provided.
The Credit Proposal document outlines the fees, charges and commissions   relating to the particular credit contract or consumer lease and to whom/by whom they are payable.

Statement of Credit/Mortgage Advice

This is the document the client signs giving the Authorised Credit Adviser authority to act on the client’s behalf and also give privacy consent for the personal details to be passed onto the lending institution. It also advises the amount of commission a broker will receive as well as the costs involved in taking out the loan. A copy of this appointment must be given to the client and a copy kept on your file. This document may be a combination of industry known documents as stated above and not required if you have completed credit proposal and credit quote

Evidence of income

Lenders require documentary evidence of income to support a loan application. Verifying employment may be in the form of two or three consecutively dated payslips plus a PAYG summary that indicates regular overtime or allowances/commissions. A letter or employment contract from the employer will also suffice in the absence of payslips. Other income will require documentary evidence as determined by the lender.

Self-employed/ Commercial clients

A copy of the last two years individual’s and company tax returns/financial statements along with a serviceability assessment for self-employed individual/partner.

Signed statement of assets & liabilities (SOP)

This information allows lenders to readily ascertain the financial standing of the applicants.

Cash flow forecast

When you are arranging funding for the larger type loans, whether it is for plant and equipment or say, a commercial factory unit a Cash Flow Forecast is essential as it will assist the lender in appreciating where the business is headed. But remember it will have no bearing on the lender’s decision-making as it will look only at anecdotal evidence.

Serviceability

When submitting an application you are to include a Serviceability Assessment sheet which shows the lender you have ensured the clients can afford the loan. You will find these assessment tools form part of the lenders’ online broker toolkit and are relatively simple to use.When you undertake your accreditation training each lender will provide the facility or you will have access to all the tools through your aggregator.

Copy of the Offer to Purchase/Suppliers Invoice (Showing serial numbers etc. to identify goods and chattels)

A sheet of paper representing the document will be sufficient evidence. However, most lenders will be required to verify the original document. You will be advised of their requirements when you complete the accreditation courses. This information is vital in proving ownership of the goods.

Copy of the Offer and Acceptance (WA) or Contract of Sale

Lenders need a copy of the completed O&A or COS to verify the purpose of the loan and for the ordering of valuations, if required. You will be advised of their requirements when you complete the accreditation courses. It is also worth noting that some lenders will only carry out a kerb-side valuation when the LVR is 80% or less.

First Home Owners Grant application

Whilst the Federal Government provides the funding for these concessions each State and Territory Government administers the schemes. Therefore so your clients can get the maximum benefits available, your task is to research this area of funding thoroughly by visiting the Office of Revenue in the jurisdiction in which you operate.These forms are to be completed to accompany your case study files.

First Home Buyers Stamp Duty Concession application

As explained above there are variances in what concessions are available. However notwithstanding the fact that in some areas solicitors/conveyancers or settlement agents handle this aspect of the transaction, we at AAMC believe it is up to the Broker to ensure that there is a smooth settlement transition. This will happen if the Broker provides the clients with the necessary paperwork, has it completed correctly and keeps it on file for presentation to the correct parties when settlement is due to take place.

Copy of Motor Vehicle Registration Papers

For the same reasons as stated in item 12.

Private Sale documents

You may not come across this type of loan requirement often, however you will be required to produce additional information such as:

An inspection report
A valuation report
A Statutory Declaration from the supplier/owner showing ownership and encumbrance free
Vendor ID and bank details.

Fully completed loan application

Let us first accept that all lenders require the same information, however with the layout of their application forms it just appears in different places. You are not only expected to provide the clients’ full personal details, but you are obliged to be honest and frank about the information you are submitting. As a Broker you are also obliged to inform either the lender or the client of any information of which you become aware that may have a material effect on the transaction. If you do not follow this principle you could well become the subject of legal action from either party.The application forms are quite simple to complete provided, however, you have gathered all the information to make it a simple task.
There is one area on confusion and that is the completion of the “Declaration of Purpose”. By completing this incorrectly you may jeopardise your clients’ rights under the National Consumer Credit Protection ct 2009.

 

Notes to Lender

Lenders when assessing a loan rely heavily on information provided. They do not have the privilege of sitting down and interviewing the clients. As you have already learnt, Brokers must provide as much information as possible when submitting a loan application, of any nature, to ensure a fair and reasonable decision can be made by the lender.Therefore it is in everybody’s interests to highlight valid points in a Cover Sheet. Shown below this table are two options that tell a tale. Please do not just copy these examples and submit – use your initiative and present the information along similar lines as we have demonstrated.
There will be many and varied reasons why you think an application should be approved so let the lender share your reasons. Don’t make them second guess.
If you follow this path, it will stand you in good stead with the lenders and exhibit a standard of professionalism that unfortunately not enough Brokers take seriously. Half measures or the attitude “Close enough is good enough” does not wash in today’s competitive economic climate. Lenders that receive half-baked applications will put them to one side and get on with the fully detailed ones to acknowledge the correct presentation.

Lender’s document checklist

All lenders have a checklist to ensure you have submitted the application correctly with all the supporting documentary evidence. Please ensure this is completed.

AML/CTF ID Information

Due to criminal activities and money laundering you have to provide the necessary identifying documents to support the application. Where you are dealing with a client’s existing lender, note on the lender’s document file/checklist that you haven’t supplied the information because client is known to the lender.Some lenders carry out their own verification through their branch network.

Business Registration/ Constitution and/or Trust Deed

Business registration legitimises the authenticity of the applicant.The Constitution and/or Trust Deed reflect the authority of those able to act for and on behalf of the company.

 
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