Legislative And Regulatory Frameworks Help

Legislative And Regulatory Frameworks Help

Chapter 3 – Legislative and Regulatory Frameworks

Chapter 3 – Legislative and Regulatory Frameworks

Finance Broking

in

Practice

(FBP)

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Student

Assessment Booklet

Name: Kiran pandravada

Date:26/09/2021

Manual Version Number: VR240919

International Institute of Technology © 1 VR240919

Please note: It is a requirement for students to make their submissions using this electronic assessment booklet. At the facilitator’s discretion any submissions made in another format may not be accepted. If you are completing the course via various computers, please save the one booklet on a USB so you can send the submission in using the one file

Getting Started

Please insert your NAME,DATE and the Manual Version Number on the first page of your Assessment Booklet.

Answering Assessment Questions

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· Short Answer Questions

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Short Answer Questions

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Referencing Your Answers

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· Understanding a question.

· Possessing knowledge about the issue, which in some assessments includes locating information from references.

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· An idea is sourced; reference it e.g. (Bagra 2010).

· You are directly quoting, wrap it in quote marks e.g. “Tom Horner sat in a corner” (Peters 2007 page 7).

· You are quoting from the internet include quote marks and the web reference e.g. “ban on conflicted remuneration structures including commissions” <http://futureofadvice.treasury.gov.au/content/Content.aspx?doc=reforms.htm> accessed on the 28th of December 2012.

Please note that no more than 5% of direct quoting which is referenced is deemed to be acceptable and no amount of direct quoting without referencing is deemed acceptable. Any direct quoting should form only a small portion of any answer and the answer should demonstrate the student understands and can interpret the question and provide an appropriate answer.

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Distance Education Students

Student Declaration

I understand that by completing this form I am bound by the following declaration.

To the best of my knowledge and belief, no part of this assignment for the above unit has been copied from any other student’s work or from any other source except where due acknowledgment is made in the text, or has been written for me by another person.

Name: Kiran Pandravada Date:26/09/2021

FBP: Chapter 3

International Institute of Technology © 6 VR240919

Short Answer Question 1

(a) Which sort of loans does the National Credit Code cover?

· credit cards

· investment loans

· hire purchase agreements

· personal and home loan

· mortgages and guarantees

(b) What evidence would So Sweet as a holder of an Australian Credit License be required to prove the following?

· Maintaining Australian Credit License

· Authorisations with aggregator.

· Mortgage brokers must complete their Continuing Professional Development points 2 months before the professional body’s due date. Note: So Sweet keep training records.

· Audit loan documentation.

So sweet has an Australian Credit License holder is required to be prove that they fulfil the rules ASIC have of them. Aggregators and ASIC could audit the Australian Credit License holder and require evidence that they are fulfilling their responsibilities. An Australian Credit License holder should not only ensure they have the requisite systems in place but also ensure they are updated. An audit should be regularly undertaken to prove that the requirements are fulfilled. The process is about providing evidence that the requirements have been fulfilled. As an example, take the requirement to maintain an Australian Credit License.

To prove that the license exists the auditor would ask to sight the license, being careful to insist that it is the original rather than a copy, which could be manipulated. The auditor could take a photocopy of the original and place it on the audit file complete with their initial and the date under a statement that the original has been sighted. It is important that the auditor proves that the license is still current so they should require proof that the annual fee has been paid to keep the license current. The invoice coupled with the evidence of payment e.g. the relevant bank statement or credit card would be good evidence that it was paid. Other requirements could be proved using the same theory for example authorizations with their aggregator, mortgage brokers Continuing Professional Development requirements or audit loan documentation requirements. The process involves what documents would prove the responsibilities are being undertaken currently

(c) What would you do to implement an audit of loan documentation for staff and authority holders?

(d) What statutory records does a financial services organisation need to maintain?

Short Answer Question 2

(a) How can a mortgage broker avoid perpetrating unconscionable conduct?

(b) What are the most common client complaints?

Short Answer Question 3

You as part of a team have been requested by So Sweet to produce a Credit Guide. Your role is to emulate the credit guide which is located on the elearning platform under supporting documents called “Student Credit Guide Assistance”.

You must use your own address and phone number as the office address and number and your date of birth as the Australian Credit Licence Number i.e. ddmmyy.

Include a footer to show where the document is stored electronically. The document should be named so that the content and author are easily identifiable.

Use the following Style Guide to prepare the Credit Guide

Style Guide

Fonts

Heading 1 Main headings – Calibri 16pt, Bold

Heading 2 Sub-headings – Calibri 11pt, Bold

Normal Normal text – Calibri 12 pt. at 1.15 spacing

Signature – Lucida Handwriting 16 pt.

Letters

· Date format – Write the date number in digits, the name of the month in words and the year in digits, for example 21st August 2009 not 21.8.2009

· When writing numbers in a paragraph or letter – From zero to nine, use words rather than digits and from 10 and above use the numbers themselves.

· Colour – Unless otherwise directed, do not use colour or highlighting.

· Numbers style is Arabic 1, 2, 3.

· Bullet Style as used in this document

· Spaces after full stops or other punctuation marks – Leave only one space.

· Letter Margins – must be 3.5 cm on both sides.

· Indents – Do not use indents and apply block formatting to all documents.

· Paragraph spacing – Set to add space before and after each paragraph.

· Text spacing – All text spaced at 1.15

Short Answer Question 4

(a) Briefly explain the most common types of frauds perpetrated in the mortgage industry?

The most common type of mortgage fraud is falsifying the information on relevant

documents. The most common ways to commit a mortgage fraud are

· The application forms may contain falsified information about income, debt, employment and other issues

· Tax returns are also commonly manipulated documents because the information on a tax return may be altered to leave the impression of higher income

· Employment verification documents are also subject to manipulation because changes may be made to employment dates, hourly or salaried earnings, job position or other work-related information

· Bank deposit documents may be inflated e.g. a large deposit can be made from an outside source such as a credit card, friend or relative in order to increase the current balance, which leaves the impression of having more cash on hand than is actually true

· The valuation process can also be subject to fraud, which can be committed by the borrower, the valuer, or both e.g. the borrower could alter the valuation on the actual document, the valuer could inflate the home’s value, or the borrower could pay the valuer to inflate the home’s current value to obtain a larger amount of credit

· Fraudulent documents can be used to support the application for a very high level loan; where the documents give the impression that the property is owned by a particular person when it is not, or where the value of a particular property that is being used as the security for the finance is inflated or ‘jacked up’, valuation fraud exists

· Forged title deeds and/or stolen identities can also be used to re-mortgage the property of unsuspecting homeowners and take the funds

· A Certificate of Title in the wrong hands allows a con artist to pretend they are the homeowner, perpetrate a fraud and obtain loan funds

(b) If a client perpetuates fraud, will the mortgage broker be liable?

Short Answer Question 5

One afternoon, Millicent asks if you would help with a client. She introduces you to Bob Butler who is one of Ying’s clients and then leaves. You invite Bob to sit down and ask him how you can help. Bob, who is 80 years old, launches into a tirade. You are able to move past his emotion and begin to determine whether there are genuine causes for what appears to be a pressing complaint. Firstly, according to Bob, Ying has failed to return his phone calls for the past two weeks. This means that Bob has been experiencing great difficulty in obtaining a refund of the brokerage fee. Bob wants a refund because Ying failed to explain the terms and conditions of the prospective loan and because she refused to answer his questions. According to Bob, when his ‘solicitor friend’ read the fine print, the loan was of an ‘interest only’ nature. Bob claims he specified that he was not interested in this kind of loan. He later found out that the other product Ying had recommended was out of date. Ying also refused to comment on the impact of an easement that appeared on the title of the property. As an aside, Bob notes an administrative error in the invoice which he considers to be irrelevant because, in his words, he has “no interest in paying an incorrect invoice for an incorrect product rendered through inadequate service by an incompetent and inept broker”.

When Bob finishes venting, you explain that Ying was in a car accident and has been on sick leave for two and a half weeks. You immediately apologise for the firm’s oversight and failure to divert her phone calls, adding that you forwarded an email to Ying only this morning so that you can guarantee her ‘out of office’ reply is active. Bob, however, is old school and uses Australia Post or fax rather than email. Believing you are making excuses for your colleague, Bob snaps back that he is “not interested in empty placations but rather workable solutions”. He stops, breathes and asks point blank, “Why am I always the mug that has to deal with idiots? What are you going to do to fix this mess?” Thankfully, at that moment, Bob’s mobile rings. He looks at the caller ID and tells you it is an important call, you offer to return in five minutes to continue the discussion.

You go straight to your office and access the ‘Credit Policies and Processes Manual’ which are available on the portal. You read the ‘Code of Conduct’ to determine what is expected of both you and Ying as financial advisers. You also search the document for two key words; ‘dispute’ and ‘complaint’. The computer does not return any hits for either word. Given the time limit, you resign yourself to having to remember basic dispute resolution protocols from last week’s in-house training session. You analyse the situation as you know it and prepare yourself to continue dealing with the complaint.

(a)

i. Make a list of bullet points to summarise your understanding of Bob’s complaint and to remind you of the issues you need to discuss.

ii. What are the procedural requirements you and Ying need to follow under the code of conduct that are relevant to this case?

iii. What are the key issues and how are you going to address them? Consider Ying’s actions, Bob’s expectations, Bob’s and Ying’s rights, basic dispute resolution procedures, and opportunities you can develop to enhance the quality of service your firm provides.

iv. Put yourself in Bob’s shoes. How are you going to empathise with him?

v. Which follow-up questions will you ask Bob?

vi. How will you explain the relevant dispute resolution schemes, services and governing statutes in plain English?

(b) When you return to the conference room, Bob demands you give him Ying’s contact number because his complaint is with her and not with you.

i. What is your response?

ii. Which details of Bob’s complaint would you be willing to share with Ying upon her return to the office and why?

(c) Write an email to Millicent to document how you handled this matter (take a screen shot of the email to fulfil this aspect ensuring you include the email address it is being sent from). Also identify ways that you believe the office’s processes and standards can be improved as a result of the issues Bob raised.

(d) How did you monitor Bob’s level of satisfaction during your conversation? What signs did you look for to determine whether Bob left a satisfied customer?

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