Responsible Lender Regulations: What You Should Know.

The finance sector can be complex and we consider it essential that our customers seeking consumer loans have the opportunity to be as well-informed as possible in making their decisions. To educate and inform, we provide these informational and explainer articles to add to your knowledge bank in regard to consumer finance.

An integral part of the service we offer at Jade Caravan Finance is to streamline the caravan loan process to save our customers time and a lot of hassle. But despite our best efforts, there are people that may consider we request and issue a considerable amount of information and that the loan process has many steps. In response, we point out that we are licenced finance brokers and that means we must abide by the laws and regulations as determined by Australian law.

The activities we carry out and services we provide as a credit licensee, are covered by the National Consumer Credit Protection Act 2009. An Act which comes under the auspices of the Australian Securities and Investment Commission (ASIC). The sets out detailed responsible lending guidelines and obligations that we must comply with or risk penalties.

In apply for or even just making an enquiry regarding a caravan loan, individuals should be aware of the lender regulations as they are intended to safeguard consumers. We’re providing this comprehensive information to give you a greater insight into the caravan loan process and especially what you can expect from your Jade consultant.

Role of ASIC 

While defined as a ‘Government body’, ASIC is independent and defined as the official regulator tasked with regulating the financial services and corporate sector. This includes consumer credit, financial markets and the activities of corporations. The National Consumer Credit Protection Act is administered by ASIC. This Act clearly defines the guidelines for the obligations and conduct of all credit licensees, that includes banks, finance companies, lenders and licenced finance brokers such as Jade.

The conduct and obligations specifically relate to the dealings and interaction between lenders and consumers when seeking consumer loans. When engaging with Jade Caravan Finance, you can be reassured that your consultant is operating under stringent laws at every step of your caravan loan procedure.

Responsible Lender Guidelines

All organisations and persons that offer loan services to consumers must hold an Australian Credit Licence which is issued through ASIC. Jade’s ACL is 484387. If you are dealing with any company or individual in regard to finance, the first question you should be asking is for their ACL.

The guidelines that Jade and all other licensees must adhere to are established by ASIC. There are several sections to these guidelines including the lending conduct obligations that must be followed. One crucial element of those obligations is that each licensee must clearly establish and implement their own set of operating procedures which will ensure they do meet their obligations under the Act.

A key obligation is that a licensee is not permitted to enter into any credit contract which is unsuitable for that consumer. In the case of caravan finance ‘entering into a contract’ includes offering a caravan loan to any customer, suggesting any credit contract or assisting a person to make an application for a credit contract. It the contract is assessed as unsuitable for you, Jade Caravan Finance is not permitted to offer you that loan.

So how do credit licensees comply with the regulations? More specifically you’re probably thinking what are the obligations that Jade Caravan Finance must comply with? What practices and procedures do we have in place to ensure we comply?

Obligations of Responsible Lenders

The obligations that credit licensees must comply with as set out by ASIC are:

  1. Credit licensees must set out, employ and strictly follow a set of practices to check and verify the financial situation of a customer and assess, for that person, the suitability of a specific loan.
  2. Credit licenses must adhere to the obligation of disclosure of information and documentation as specified by ASIC, to the customer. Such information is to ensure that the customer understands the services and costs of the services being provided and that they understand the detail of a specific loan contract that is being offered.

Knowing these obligations that responsible lenders such as Jade Caravan Finance must meet, will hopefully provide you with greater insight into the caravan loan process and an appreciation of the reasons for the diligent and thorough approach of our consultants.

How Jade Meets the Obligations

Jade has developed and strictly implements a Responsible Lending Flow Sheet for interactions with customers. The Flow Sheet is the process that Jade consultants must follow, step-by-step, in discussions and interactions with caravan finance customers.

The Jade procedure is as follows:-

  • A copy of the Credit Guide is required to be provided to each customer where discussions have occurred in regard to finance. Our protocols are required to record and retain when the Guide was issued to the customer as our internal confirmation that this step was completed.
  • If a DOF is proposed, all credit quotes must be signed and the signed quote form part of the application submission.
  • Applicants must sign the privacy statements as confirmation that a Jade consultant has advised the customer of issues involved in the sharing of their information, as provided, with lenders, in the process of securing a caravan loan offer or a quote.
  • A Detailed Credit Check is completed which entails the verification of address history, the checking of the customer’s credit score and credit history; and a check of their history of directorships.
  • Financial Capacity Check is completed for each customers. This particular Check involves the verification of information that a customer has provided in regard to their financial situation.
  • Living expenses are checked via a verbal process in order for the consultant to confirm that the customer has included all their living expenses. To confirm the verbal discussion occurred and to confirm the detailed expenses that were discussed, a copy of this check is issued to customers.
  • The next step involves the consultant completing a Pre Lim. This document states that the needs of that customer are being reviewed by that consultant.
  • The next step is the sending of a Credit Proposal to the customer. This Proposal contains details on the way the consultant advancing with either the enquiry or the application; the total of the loan; the repayment schedule proposed; and additional details with that caravan loan.
  • Some consumer loans allow for the inclusion of a balloon amount which is payable at the end of the loan term. If the customer requests a balloon, the consultant must discuss with the customer their intention in regard to finalising this balloon amount.
  • The Jade consultant retains thorough and detailed notes of each step and of each process completed. These notes form the timeline of interactions between the customer and the consultant.

This Flow Sheet is in place to ensure that Jade Caravan Finance complies with the responsible lending obligations which by their purpose, provides confirmation that the customer’s best interests are addressed.

Obligations of Disclosure

The second part of the Responsible Lender Obligations relates to disclosure of information. Specifically, that all customers, whether just an enquiry or a complete caravan finance applicant, is issued with the information as specified by ASIC.

The selection of documents has been specifically made as a documentation which provides people seeking secured or unsecured caravan finance with the information they may require to fully understand the credit activities provided by Jade Caravan Finance.

Additionally, this information intends to assist customers recognise their rights as a consumer, fully comprehend the contract, offers made and help in their decision-making process.

This documentation and information includes:

Credit Guide: initial information in regard to consumer credit and lending.

Quote of Services: specific details of costs and fees for the service that the credit licensee intends to charge. This quote must be accepted by the customer, signed and dated.

Proposal Document: details of costs of services with the inclusion of commissions which the credit licensee may be receiving.

Written Assessment: when a credit contract, ie a caravan loan, is assessed as not suitable for a particular person, that person must be given a copy of the assessment.

The Jade Approach

Jade has implemented this stringent set of processes, procedures and protocols in order to meet our legal obligations and compliance regulations as established by ASIC. However, as a long-term credit licensee, Jade has a long-term commitment to customers to that our actions, attitude and protocols will always be highly ethical and professional.

If you are considering approaching a bank or a finance company or another lender for lowest rate caravan loans, this information will hopefully equip you to check their protocols and be knowledgeable in reviewing the way in which they meet their obligations as a responsible lender.

If you have any questions around any aspects of consumer finance, please contact Jade Caravan Finance and one of our consultants will assist you. Call 1300 000 003