Written Assignment
Complex Lending and Broking
(DFMB2_AS_v1)
Student identification (student to complete)
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10777619 |
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Result summary (assessor to complete)
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Feedback (assessor to complete)
[insert assessor feedback]
Before you begin
Read everything in this document before you start your written assignment for the Complex Lending and Broking (DFMB2) subject.
About this document
This document is the written assignment and includes the following:
• Instructions for completing and submitting this written assignment
• Section 1: Case Study 1 – Ray Murdoch and Steve Brown – Commercial Equipment Finance
– Task 1 – Identify the clients’ complex broking needs
– Task 2 – Develop complex broking options
– Task 3 – Implement complex loan structures
– Task 4 – Detailing analysis findings
• Section 2: Case Study 2 – Bill Smith and John Jones – Commercial Premises Finance
– Task 1 – Identify the clients’ complex broking needs
– Task 2 – Prepare complex broking options
– Task 3 – Implement complex loan structures
– Task 4 – Detailing analysis findings
• Section 3: Case Study 3 – Rahn and Deepa Singh – Property Development Finance
– Task 1 – Identify the clients’ complex broking needs
– Task 2 – Prepare complex broking options
– Task 3 – Implement complex loan structures
– Task 4 – Detailing analysis findings
• Section 4: Short answer questions
– Task 1 – Complex collateral (specialised security)
– Task 2 – Complex loan structures
– Task 3 – Legislation and codes of practice
• Section 5: Ethical Decision-making Frameworks and Principals
– Task 1 – Frame the ethical question applicable to the situation
– Task 2 – Determine ethical response to the situation
– Task 3 – Develop implementation plan and carry out ethical response to the situation
– Task 4 – Evaluate the outcomes of the ethical response
How to use the study plan
We recommend that you use the study plan for this subject to help you manage your time to complete the written assignment within your enrolment period. Your study plan is in the KapLearn Complex Lending and Broking (DFMB2v1) subject room.
Instructions for completing and submitting this written assignment
Saving your work
Download this document to your desktop, type your answers in the spaces provided and save your work regularly.
• Use the template provided, as other formats will not be accepted for this written assignment.
• Name your file as follows: Studentnumber_SubjectCode_Assignment_versionnumber_Submissionnumber
(e.g. 12345678_DFMB2_AS_v1_Submission1).
• Include your student ID on the first page of the written assignment.
Before you submit your work, please do a spell check and proofread your work to ensure that everything is clear and unambiguous.
The written assignment
The information and data you require to complete this written assignment is presented in the case studies which are located in the subject room.
This written assignment covers complex lending and broking and requires you to answer the questions for all five (5) sections. Each of the three (3) case studies focus on a different lending scenario and must be completed.
Word count
The word count shown in each question is indicative only. You will not be penalised for exceeding the suggested word count. Please do not include additional information which is outside the scope of the question.
Additional research
When completing this assignment, assumptions are permitted although they must not be in conflict with the information provided in the case studies. All assumptions must be noted.
You may be required to conduct your own research in addition to the topic notes provided to source information to answer some of the assignment questions. You may also be required to source additional information from other organisations in the finance industry to find the right products or services to meet your client’s requirements to source indicative interest rates and to calculate any fees and charges that may be applicable.
Submitting the written assignment
Only Microsoft Office compatible written assignments submitted in the template file will be accepted for marking by Kaplan Professional Education. You need to save and submit this entire document.
Do not remove any sections of the document.
Do not save your completed written assignment as a PDF.
The written assignment must be completed before submitting it to Kaplan Professional Education. Incomplete written assignments will be returned to you unmarked.
The maximum file size is 20MB for the written assignment. Once you submit your written assignment for marking you will be unable to make any further changes to it.
You are able to submit your written assignment earlier than the deadline if you are confident you have completed all parts and have prepared a quality submission.
Please refer to the Assignment submission/resubmission instructions (pdf) in the Assessment section of KapLearn for details on how to submit your written assignment.
Your written assignment must be submitted on or before your due date. Please check KapLearn for the due date.
The written assignment marking process
You have 12 weeks from the date of your enrolment in this subject to submit your completed assignment.
If you reach the end of your initial enrolment period and have been deemed Not Yet Competent in one or more assessment items, then an additional four (4) weeks will be granted, provided you attempted all assessment tasks during the initial enrolment period.
Your assessor will mark your written assignment and return it to you in the Complex Lending and Broking (DFMB2_v1) subject room in KapLearn under the ‘Assessment’ tab.
Make a reasonable attempt
You must demonstrate that you have made a reasonable attempt to answer all of the questions in your written assignment. Failure to do so will mean that your assignment will not be accepted for marking; therefore, you will not receive the benefit of feedback on your submission.
If you do not meet these requirements, you will be notified. You will then have until your submission deadline to submit your completed written assignment.
How your written assignment is graded
Assignment tasks are used to determine your ‘competence’ in demonstrating the required knowledge and/or skills for each subject. As a result, you will be graded as either ‘competent’ or ‘not yet competent’.
Your assessor will follow the below process when marking your written assignment:
• Assess your responses to each question, and sub-parts if applicable, and then determine whether you have demonstrated competence in each question.
• Determine if, on a holistic basis, your responses to the questions have demonstrated overall competence.
You must be deemed competent in all assessment items in order to be awarded your qualification, including demonstrating competency in:
• all of the exam questions
• the written and oral assignments.
‘Not yet demonstrated’ and resubmissions
Should sections of your assignment be marked as ‘Not yet demonstrated’ you will be given an additional opportunity to amend your responses so that you can demonstrate your competency to the required level.
You must address the assessor’s feedback in your amended responses. You only need amend those sections where the assessor has determined you are ‘Not yet demonstrated’.
Make changes to your original submission. Use a different text colour for your resubmission. Your assessor will be in a better position to gauge the quality and nature of your changes. Ensure you leave your first assessor’s comments in your assignment, so your second assessor can see the instructions that were originally provided for you. Do not change any comments made by a Kaplan assessor.
Units of competency
This written assignment is your opportunity to demonstrate your competency against these units:
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Unit code |
Unit name |
DIPMB2 Complex Lending and Broking |
| FNSFMB512 | Identify and develop credit options for clients with special financial circumstances |
Started and completed |
| FNSFMB513 | Present credit options to clients with special financial circumstances |
Started and completed |
| FNSFMB514 | Implement complex loan structures |
Started and completed |
| FNSINC504 | Apply ethical frameworks and principles to make and act upon decisions |
Started and completed |
Note that the written assignment is required to meet the requirements of the units of competency.
We are here to help
If you have any questions about this written assignment you can post your query at the ‘Ask your Tutor’ forum in your subject room. You can expect an answer within 24 hours of your posting from one of our technical advisers or student support staff.
Note: Some commercial lenders will not provide interest rate quotes on some commercial products. Often commercial lenders add a risk weighted margin to a base lending rate for certain commercial products. Without conducting an analysis and risk score, they tend to be reluctant to provide quoted interest rates over the phone. For the purposes of the case studies, conduct online research to ascertain approximate interest rates, loan terms available, fees and charges that usually align to the types of products that would be required to execute the client’s transaction. You are allowed to use estimates.
The case studies can be located in the subject room.
Section 1: Case study 1 — Ray Murdoch and Steve Brown – Commercial Equipment Finance
Task 1 — Identify the clients’ complex broking needs
Business risk can be defined as anything that may impact the financial health of a business, or that could lead to insolvency.
The risk to a business can eventuate for a variety of reasons and can come from internal or external sources. It is your responsibility (as the broker) to understand the client’s business, potential risks, their history, experience and business performance. You will also need to understand specific aspects of the transaction such as your client’s intended goals, objectives and requirements in purchasing the equipment.
Task 1: Question 1
Prepare a list of questions that you would ask Ray and Steve in order to gather information in preparation of the loan application.
Your questions for Ray and Steve should uncover:
• their understanding of the risks and complex nature of purchasing this equipment (e.g. the risk that the investment may not meet the returns they are expecting)
• their understanding of the potential risks and benefits/returns associated with financing the equipment purchase
• identification of their tolerance of risk in relation to the purchase, damage to equipment during delivery, installation or operations. How would they mitigate these risks?
• if they have any specific product and/or product features they require
• if they want flexibility in the product to be able to pay it out early or be able to refinance
• if they would consider using their own properties as security to provide different lending options
• you need to uncover their understanding of their obligation for insurance and maintenance of the equipment etc.
• to understand the financial aspects of the transaction (i.e. total costs, installation, other potential premises modifications required to accommodate the machine etc.)
• the current financial position of the business.
• to ascertain if they have a taxation strategy in regards to the purchase of the equipment
• which other professionals will they will consult with and for what purpose?
• to understand and/or mitigate any other potential risks you have identified with their situation. For example, their experience, background, succession planning, business ownership issues.
(500 words)
Student response to Task 1: Question 1
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What current financial products do you have in place currently? What is your understanding of the machine and how it functions, how does it compare to what you are using now? How often do you need to service it? Can you undertake the services, or does the supplier provide a trusted technician? Are they local and accessible to you and the machine? Have you been to see the machine? Were you provided with training on how to operate the machine? Do you know what to do if there are issues? Have you ever purchased machines from this supplier before? Is the supplier credible? How has it been dealing with them so far? What sort of units have they advised the machine processing? Do you have a way of tracking if the machine is producing the required units? What would happen if the machine was lost in transit or if there were installation delays? How would you meet your repayments during this time? Is the company who made the machine responsible for ensuring that it gets here and is fitted correctly? Are your current premises suitable for the new machinery? Have you consulted your accountant, insurance broker, and contract lawyer? What’s important to you regarding the ability to repay the loan? Are you worried about repayment in the first six months? Have you considered how lower production levels in the initial stages of the installation and training of employees may impact your cash flow? Do you want to pay principal and interest? What are your thoughts about a balloon payment at the end of the loan term? You have indicated that you do not wish to provide your properties security against this loan. Are you aware that there may be other products that we could consider that have extra features? Features such as line of credit, overdraft facilities etc. Knowing that there may be other products to choose from, is using your property as security something you would consider? Does your current business insurance cover the installation of the machine and maintenance of the device, say, if something was to go wrong. What existing insurance do you have in place, or do you need additional insurance? Some insurers will not cover all types of equipment. Have you come across this issue, or do you know if this applies to you? Do you know how much the insurance cost would be? Are there any conditions associated with the insurance? Does the insurer require you to use preferred contractors to maintain and fix the machine? Are there contractors within your state that are accredited to undertake these works? Do you know if they have dealt with your machine or machines from the same company before? What are your margins? What is your new revenue expected with the implementation of the new machine? What are your expenses? What is your most significant expense? Can this be reviewed, and are there any savings that can be made to bring costs down? Have you had discussions with your finance manager or accountant regarding the impacts of the purchase? How many of your staff are currently trained in the operation of the machine? What does your succession planning look like? |
Task 1: Question 2
Assess the special financial needs of Ray and Steve by developing a matrix of key product features that would address those needs, in the following table:
Student response to Task 1: Question 2
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Product name |
Key product features |
Client financial needs |
| Chattel mortgage | • Immediate ownership, allowing the ability to optimise cash flow while lowering the impact of GST (if registered). Able to claim GST portion of purchase as an input credit. |
repayments, structure, flexability secure the loan using the “chattel” buyer takes ownership upon purchase once paidoff, the mortgage is removed |
| Lease agreement | • Tax-deductible overhead expenses can be deducted from the business income. Can benefit in some circumstances balance sheet ratios. No deposit or down payments are required to obtain an agreement. Can be upgraded or have additional add on’s if growth is anticipated. Reliability to negotiate when structuring a deal. Option to ad costs like installation and maintenance and other service fees to the agreement. | • personal and business financial staments
Business plan Business bank statements Prior tax returns LLC
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| Commercial hire purchase | • Flexibility to make repayments that align with revenue. Allows for tax deductions for the depreciation of goods. Once the purchase is finalised, the item is owned by the hirer. |
Preserves working capital Generally no additional security required for hire purchase – apart from the asset itself Fixed rate financing allows you to budget for repayments Flexible repayment options to suit your cash flow GST is included in the amount financed Taxation claims may be applicable, seek independent taxation advice to see whether you are eligible |
Task 1: Question 3
Consider the client background information you have been provided and present a brief explanation of the most relevant key product features that appear to meet the financial needs of Ray and Steve. Highlight any risks that these product features may present.
Student response to Task 1: Question 3
| Answer here |
Assessor feedback for Section 1: Task 1 — Identify the clients’ complex broking needs
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Task 2 — Develop complex broking options
You are required to prepare a full loan proposal addressed to Ray and Steve outlining available loan options and the application process. The proposal must also describe the potential advantages and disadvantages of the financing option that is being recommended.
In a suitable report format, you should prepare the proposal to Ray and Steve, covering the following:
1. The parties to the loan – what names will be on the loan contract?
2. Provide two (2) different product options that would meet their needs and objectives – outline the product name/type, loan term, interest rate, balloon payment (if applicable), fees and charges and monthly repayments.
3. Provide your recommendation of the best product option to meet their needs. State why the other product was not in their best interest or the best option for them.
4. Name three (3) lenders that offer the product you recommended for their transaction. Advise them about the product type, loan terms that are available, interest rate, balloon payment (if applicable), fees and charges and monthly repayments.
5. Provide a summary of the lender’s applicable fees and charges — including set up costs and ongoing fees and charges.
6. Advise which relevant disclosures need to be made covering broker remuneration.
7. Outline all security that will be required, including directors guarantees.
8. List the documentation they need to provide to obtain the funding for the machine and to obtain a loan approval.
9. Outline their responsibilities, so they fully understand their obligations regarding the security offered and the equipment during the loan term.
10. Provide details of the financial and transaction risks associated with the new loan of which they should be made aware. For example, what would happen if they could no longer service the debt?
11. They enquired about claiming back the GST that is included in the purchase price of the machine. You also feel that they may be able to utilise ‘Small Business Asset – Instant asset write-off’ benefits. In accordance with your qualification as a mortgage broker, what should you advise them to do regarding their question on claiming back GST?
12. Invite them to ask you any questions they may have about the transaction.
13. Provide an instruction for them to advise you to proceed with the application on their behalf.
(800 words)
Notes: Any assumptions you make should be listed, and not be in conflict with the case study information already provided.
You are to write a loan proposal to your clients, demonstrating your professional writing skill — not simply commenting on each of the points detailed above.
Your proposal should be supported by evidence-based statements and not contain opinion-based commentary.
The use of tables in the report to set out some of the numeric information may be of benefit.
Use an Upfront commission at 0.66% and trail of 0.165% which includes GST
Student response to Task 2
| We are looking forward to working with you to assist you with your equipment finance application. Below is a summary of your current position, and then I will talk in more detail about some financial solutions to address your objectives. So we are on the same page. Are you able to advise if I have captured everything correctly?
You both are significant shareholders of Pallet-R-Us Pty Ltd (50/50), a registered entity manufacturing metal pallets. Pallet-R-Us Pty Ltd was established 30 months ago. Recently, you have decided to change your business model to incorporate the in-house powder coating process. You previously outsourced this to an external contractor. You have a supplier in the US. Who has quoted you for a new machine with a built-in technical platform system. The purchasing invoice amount for the machine is $800,000 thousand, which includes a software upgrade every three years. Because you are buying from overseas, I would like to highlight that the lender will require a Letter of Credit (LC). An LC is a type of payment for importing goods from overseas. This is a transaction between the importer’s bank(or lender) and exporter’s bank for a safe and secured transaction until the goods are delivered to the destination. To establish the LC through the bank to the supplier, the applicant provides the funds to match the invoice amount or prearranged financial facility after shipping the goods. The supplier presents the required shipping documents (Bill of landing, Commercial Invoice, Packing List and other required documents) and for the reimbursement from the importer’s bank following the terms and conditions of LC.
We will only be considering financial products that would cover the required process to purchase your equipment from the US. Our financial product will need to allow for the importing equipment process and allow for a medium to long term lease loan to own/use the equipment as a fixed asset and or hire equipment for the business. The possible type of financial products are: a) An equipment finance loan – This finance loan will combine the purchasing from overseas by LC term and be replaced with an asset lease product. b)A line of Credit loan – This product is an interest-only payment loan as a mortgage of the director’s personal property. Applicants can draw the fund at any time (within approved loan limits). c) A Trade finance loan – This option is for an importer’s general import of goods, but this requires additional separate products to be added.
After considering your financial objectives and goals and assessing your current and forecasted situation, I recommend a Commercial Hire Purchase, also known as an Asset lease.
Should this be the agreed product that you both are happy with, you must understand that this type of product is subject to a pre-approved LC, which will establish your import process and allow us to utilise Commercial Hire Purchase conditions.
So essentially financier (lender) and applicant (Pallet-R-Us Pty Ltd) will use the equipment, paying a fixed monthly lease rental for an agreed term. There is an added benefit to claiming the lease payment on tax and deducting depreciation during tax terms. This product has flexible payment schedules, which we can structure to suit cash flow. Pallet-R-Us Pty Ltd will own the equipment after completing the lease term and a final payment of the balloon payment (if applicable).
Calculation of imported equipment costs to finance: Imported Value : $800,000 GST on Import value: inclusive installation costs: $20,000 (client savings) = Total :$800,000
Lease amount: Estimated total land price is calculated $800,000
To import your equipment to Australia from the US, you will need the following documentation: Supplier’s offer/quote Buyer’s acceptance and Contract Establish the Letter of credit supplier’s shipping information and schedule (ocean/air– arriving destination port etc.) Customs documentation (clearance in Australia) Transport to buyer’s destination.
When you are importing, your supplier will need to provide you with the Contract, Commercial Invoice, Packing List and Bill of Landing.
When we submit your loan application, we will gather your information by obtaining the most suitable quotations and then preparing and submitting your application to the financial institution. To do this, we will require: A copy of the business registration certificate Company tax returns (last two years) Your financial information (prepared by your accountant) Your business plan Both of your (director’s) tax returns for the previous two years An agreement of collateral on personal properties.
To ensure that your financial product is appropriate and tailored to your needs, we must ensure we have the most accurate information regarding all aspects of your business and personal financial situation.
Whilst your financial loan decisions are yours. I will ensure to assist you in the decision-making process by providing recommendations to help you achieve your objectives and assist you in determining how well each alternative meets your financial planning objectives. To ensure that your financial product is appropriate and tailored to your needs, we must ensure we have the most accurate information regarding all aspects of your business and personal financial situation.
Whilst your financial loan decisions are yours. I will ensure to assist you in the decision-making process by providing recommendations to help you achieve your objectives and assist you in determining how well each alternative meets your financial planning objectives.
The suggestions and recommendations included in your personal financial plan will be advisory in nature, and we cannot guarantee the performance of any investment or insurance products that may be purchased to implement recommendations in your loan. The loan will also include financial projections based on assumptions about future events. We cannot vouch for the achievability of such projections because the assumptions about future events may not prove to be accurate.
As we have discussed, please understand that some risks may impact your ability to meet your loan repayments. These risks include:
Pallet manufacturing trends have been slow in the last few years, related to industry demand. The current and future pallet market may change, or consumers may use new materials outside of what you currently offer. The equipment may get damaged in transit, delaying manufacturing and production forecasts.
The financial institution requires directors’ guarantees in a commercial lease as a guarantor. If the company fails to pay their repayments, the guarantor should know the range of security before agreeing and signing the agreement. In addition to this, I would recommend getting advice from your accountant, who can assist you with GST related feedback on such a large purchase.
What are your thoughts on the above? Have I captured everything accurately? Do you have any questions for me, or can I make any amendments to the above information?
Should you wish to proceed, please get in touch with me. The above figures are subject to change without notice.
warm regards,
Audrey.
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Assessor feedback for Section 1: Task 2 — Develop complex broking options
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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Resubmission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Task 3 — Implement complex loan structures
Ray and Steve have accepted your recommendations and have given you authority to proceed with their application.
As part of implementing their loan application you are required to prepare a formal written loan submission to the lender for approval.
Note: Lenders have different credit policies and submission requirements which vary from lender to lender.
Your loan submission must include:
1. the details of borrower, guarantors and all contact details
2. the borrower and key personnel’s background
3. an overview of the proposal — what the finance is for – how does it benefit the business
4. a ‘funds-to-complete’ table (cost, deposit etc.) including statutory costs and any relevant fees
5. the proposed structure of the facility being recommended — product type, loan amount, term, interest rate, repayments and residual value (if any), pricing (lender fees etc.)
6. cash flow/serviceability calculations using NPAT averaged over two years. Include the current company loan repayments along with the annual interest on the company overdraft calculated at 80% of the limit
7. full details of the security/collateral that is to be provided and whether clients should seek independent legal advice
8. any relevant conditions of approval that the client must meet (if applicable)
9. a description of the relevant risks — industry, business, transactional, financial — and how they will be mitigated
10. a list of all documents that would be attached to the application
11. any other information that is relevant to assist the lender to provide an approval
12. your comments and recommendations.
(800 words)
Notes: Any assumptions you make should be noted, and not be in conflict with the case study information already provided.
You are to write a formal submission to the lender; not simply commenting on each of the points detailed above.
The use of tables in the report, to set out some of the numeric information, may be of benefit.
Student response to Task 3
| Dear BDM,
Our client, Pallet-R-Us Pty Ltd, is a successful company well established in the pallet manufacturing industry. In June 2017, they began manufacturing metal pallets. The pallets are made using lightweight and durable material, used in all industry sectors. Their customers consist of other businesses, and they invoice a 50% upfront payment. Pallet-R-Us Pty Ltd has orders of over 3 million, which Pallet-R-Us Pty Ltd will process over the next three years.
The applicants, Mr Ray Murdoch and Mr Steve Brown, jointly own and run the company under the trading name Pallet-R-Us Pty Ltd (ABN. 123 123-123)
Mr Murdoch and Mr Brown previously worked together at ‘Protech’ before starting their company. Mr Murdoch has been in the metal fabrication field all his working life. He has an MBA and understands financial management. He also has solid engineering skills and developed most of the design works for the business himself. Mr Brown’s background is in production and managing projects/workflow. Mr Brown has a high level of technical skills. He has first-hand experience completing works to specification while maintaining high standards within metal fabrication. Both applicants have no dependants.
Pallet-R-Us Pty Ltd currently manufactures metal pallets using lightweight and durable materials. Pallet-R-Us outsource the powder coating scope to a reputable local business (contractor) at the end of the manufacturing process. Pallet-R-Us Pty Ltd has a well-established client database with three significant and several smaller clients.
The pallets produced by Pallet-R-Us Pty Ltd are being used in all industry sectors. Both of the applicant’s prior experience in metal fabrication has benefited the engineering and design of the pallets.
Mr Murdoch has a property at 43, 25 high St. Northville, NT. Which is valued at $750,000 (current home loan balance $250,000).
Mr Brown jointly owns a property with his wife (Kate) at 23 Desmond lane Northville, NT. Valued at $900,000 (current home loan balance $350,000 for Mr Brown & $150,000 for Kate).
The purpose of the loan is to purchase a machine that uses the technical platform system CNC. Pallet-R-Us Pty Ltd can program this type of machine to fabricate multiple components of their pallets at a more rapid pace. The device’s purchase will allow Pallet-R-Us Pty Ltd to undertake the manufacturing process involving powder coating the finished product. A method currently outsourced to a local contractor to meet the current and future market needs and maintain sustainable production with efficient production operating costs.
Pallet-R-Us Pty Ltd has a quote from a US supplier that outlines the purchase price of the machine at $800,000, which includes the cost of importing the machine to Australia and GST. The expenses include software installations every three years, and the lifespan of the equipment is at least 15 years.
The estimated total purchase costs are $810,000. The loan includes $72,727.27 to go towards the GST.
The required loan amount is outlined below: Purchase amount: $727,272.73 (The price condition is CNF NT seaport) Import duty on the goods: free GST on import value: $72,727.27* The charges and cost: $10,000
Credit memorandum
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Assessor feedback for Section 1: Task 3 — Implement complex loan structures:
| [insert feedback] | |
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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Resubmission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Task 4 — Verification of applicant’s financial situation
This task requires you to describe the actions that you would take to verify the applicant’s details and financial situation.
You will need to identify the key verification tasks associated with the financial situation of both individual applicants and related business activities, based on the information set out in the case study.
Task 4: Question 1
(a) Identify and list each of the individuals and/or business entities for which you would require a credit report.
(b) Name the company that you would use to access this information and explain what you require from the client, in order to gain consent to obtain this information.
(c) Part (b) requires you to obtain appropriate consent to conduct the credit check. What legislation are you complying with by obtaining consent prior to proceeding?
(d) List the information that is provided in the credit report? (Provide six (6) items)
Student response to Task 4: Question 1
| (a) Answer here
(b) Answer here
(c) Answer here
(d) Answer here |
Task 4: Question 2
(a) What documents do you need to obtain to identify the individuals that are party to this loan?
(b) Name the Legislation that covers this requirement.
Student response to Task 4: Question 2
| (a) Answer here
(b) Answer here |
Task 4: Question 3
What sources or supporting documentation would you need to obtain in order to verify the financial information disclosed by the client?
Student response to Task 4: Question 3
| • The company financial statement/information audited and signed by certified account of company • A copy of Notice of Assessment of tax return for the company and directors • Land data for the research titles and property certificates • Personal Property Securities Register : To check and get the information of the director’s registered vehicles’ finance status. • Copy of bank statements of director’s personal account |
After reviewing the background information and the business details of the applicant, complete the following questions:
Task 4: Question 4
Provide a summary of the impact that the new loan repayments will have on the company’s financial position after debt servicing. Assume a projected increase of 50% in net profit based on the Year 20X1 trading results.
Student response to Task 4: Question 4
| The company will paying the monthly lease fee $ xxxx for the loan term as a recurring lease fee. It will accumulated $ xx per annum which will impact their monthly cash flow. To cover up the lease fee, they have to increase turnover more than xx% than current year. However, the paid lease fees will be added on the year expenses and be claimed and deducted from the payable tax • Net profit (50% increase on average last two years):$ • Claimable new lease fee:$ • Estimated payable tax before new lease fee applied:$ • Estimated profit after tax:$ Therefore, the company will 5. Provide a costing of the lease as described in the background information. The interest rate for the lease will be 6%. |
Task 4: Question 5
Based on the background information provided in the case study and assuming an interest rate of 4.5% p.a., a brokerage fee of 2%, a residual value of 30% and a term of 5 years, calculate:
• the borrowed amount
• the brokerage fee
• monthly repayments
• total of annual repayments
• residual amount
• total of repayments over term of the loan including residual payment.
Please identify the calculator you have used and show your calculations.
Student response to Task 4: Question 5
| Answer here
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Task 4: Question 6
(a) Refer to Task 2 and list the two security instruments to be obtained to secure this transaction.
(b) Explain what the impact would be for the directors and the company should the lender call on each of the securities provided.
Student response to Task 4: Question 6
| Answer here |
(Task 4b questions 1-6, 500 words)
Note: To complete this task you will need to refer to the Toolbox in the sections Pallets-R-Us Pty Ltd and ‘Lending organisation’s guidelines, policies and procedures, legislative requirements, loan verification and loan standards’. You may also need to conduct your own independent research to answer these questions.
Assessor feedback for Section 1: Task 4 — Verification of applicant’s financial situation:
| [insert feedback] | |
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Section 2: Case Study 2 — Bill Smith and John Jones – Commercial Premises Finance
The case study is located in the subject room
Task 1 — Identify the clients’ complex broking needs
It is the broker’s responsibility to understand the client’s business, potential risks, their history, experience and business performance. You will also need to understand specific aspects of the transaction such as the client’s intended goals, objectives and requirements in purchasing the property.
1. Prepare a list of questions that you would ask Bill and John in order to gather information in preparation of the loan application for their commercial property purchase.
Your questions to Bill and John should uncover the following areas:
• the reasons behind the complex trust structure they have chosen – particularly with the shareholder involvement and their willingness to be involved in the transaction with the lender
• the benefits and risks with this property purchase
• their risk tolerance with different product types (i.e. fixed rates/interest only, term of loan etc.)
• the impact this purchase will have on the business and its financial position
• anticipated costs to fit out the new premises to suit their business needs
• the business structure/key personnel risks
• the business and industry risks (e.g. required licencing and professional indemnity).
(200 words)
Student response to Task 1
| Answer here |
Assessor feedback for Section 2: Task 1 — Identify the clients’ complex broking needs:
| [insert feedback] | |
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Task 2 — Prepare complex broking options
You are required to prepare a full report for Bill and John by outlining the application process and the risks (potential and real) of which they should be aware. This must be presented in a suitable format that would be sent to the client.
You will be required to outline to the directors the product options available to them and the process that will need to take place for them to complete the new property purchase and establish the loan.
In preparation of researching the product options, you will need to understand the client’s situation and what funds will be available between the purchase and the sale settlement as outlined in the case study.
The two (2) product options for the property purchase are as follows:
Option 1: A bridging loan with a term loan following bridging period (post sale settlement)
Option 2: A variable rate term loan (to effect the purchase in 90 days time).
In developing your report, you should cover the following:
1. Who are the parties to the loan, given the Trust involvement
2. Provide Bill and John with two (2) complex loan product options
– Option 1: Bridging loan with a term loan to follow the bridging period
– Option 2: Variable rate term loan.
3. What are your recommendations of the best loan structure option, including:
• the loan amount
• security/collateral including personal and company guarantees
• the loan term
• an explanation as to why the other option is not as suitable for the clients (include pros and cons and differences in fees and interest etc.)
4. Name three (3) lenders that offer the recommended product option required to facilitate this transaction. Advise the client of the product type, loan term, interest rate, ongoing fees and monthly repayment for each of the lenders.
5. What is the procedure to implement the loan, including the documentation Bill and John are required to provide and the security they need to provide?
6. Outline the risks of which Bill and John should be made aware. Information should cover risks associated with the selected loan products and required security, including guarantees and forms of security required in addition to property.
7. Provide the name of the borrower that will be on the loan contract. Also, what name will go on the Certificate of Title (given the Trust involvement) when it is registered with the Land Titles Office? (This varies from state to state so please advise which state you are from – refer to the Toolbox for assistance to conduct your research.)
8. Prepare a full funding description including a summary of fees and charges for the purchase of the property and also the setup costs (e.g. solicitors fees) and the lender’s fees and charges. If there is a shortfall of funds, how will this shortfall be covered?
9. The clients enquired about claiming back the GST that is included in the purchase price after settlement. In accordance with your qualification as a mortgage broker, what do you advise the clients to do regarding this question?
10. You request that the client informs you of any questions about the transaction and/or provide instructions for you to proceed.
11. Advise which relevant disclosures need to be made to the client regarding the broker remuneration.
(800 words)
Notes: Any assumptions you make should be listed, and not be in conflict with the case study information already provided.
You are to write a report to clients demonstrating your professional writing skills, not simply commenting on each of the points detailed above.
The use of tables in the report to set out some of the numeric information may be of benefit.
Student response to Task 2
| Answer here |
Assessor feedback for Section 2: Task 2 — Prepare complex broking options:
| [insert feedback] | |
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Task 3 — Implement complex loan structures
Bill and John have accepted your recommendations and have given you authority to proceed with their application.
As part of implementing their loan application you are required to prepare a formal written loan submission to the lender for pre-approval.
Note: Lenders have different templates, therefore, credit policies and submission requirements will vary from lender to lender.
Your loan submission must include:
• details of borrower, guarantors and their contact details
• what the business does, borrowers’ backgrounds including directors’ management ability
• an overview of the proposal — what the finance is for, the proposed structure and loan recommended, including:
– product type
– deposit amount (if required)
– loan amount
– term
– interest rate
– loan repayments.
• a funds-to-complete table, including statutory costs and any relevant fees
• debt service cover ratio (DSCR) calculations using information provided in the topic notes and the case study
• full details of the security being offered
• any proposed conditions relating to the loan (e.g. proof of sale of existing premises)
• the relevant risks. Include industry, business, transactional, economic and personal and how they can be mitigated
• any other information that is relevant to assist the lender provide an approval
• a list of the documents that you would attach in your written submission
• your comments and recommendations.
(800 words)
Notes: Any assumptions you make should be noted, and should not be in conflict with the case study information already provided.
You are to write a formal submission to the lender, or complete a word document template and copy and paste into the student response box.
Student response to Task 3
| Answer here
Credit memorandum
Borrower details
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Trust
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Background
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Purpose/loan details/funding table/pricing
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Security details/Exit strategy
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Conditions precedent (If no conditions precedent note with N/A)
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Business/Industry/Transaction Risk
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Attachments to accompany submission
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Supporting information & Recommendation
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Assessor feedback for Section 2: Task 3 — Implement complex loan structures:
| [insert feedback] | |
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Task 4 — Verification of Applicant’s Financial Situation
Commercial/business lending is less prescriptive than consumer lending, therefore the information provided to the lender may seem quite thorough to the broker, yet once the lender receives the loan application, it is likely they will seek further information and clarification.
Task 4: Question 1
(a) Identify a minimum of four (4) areas where the lender may require additional information.
(b) What financial services professionals could you engage if you were not able to answer all of the lender’s enquiries?
(c) If you needed to escalate any risks or concerns, who would you engage within your own organisation to assist?
Student response to Task 4: Question 1
| (a) Answer here
(b) Answer here
(c) Answer here |
Task 4: Question 2
In task 2 you obtained the client’s agreement to proceed with the loan application. In accordance with regulation, legislation and codes of practice, where should this information be recorded?
Hint/Tip:
In addition to the topic notes, you may find some information in the Toolbox
Student response to Task 4: Question 2
| Answer here |
Task 4: Question 3
When identifying commercial borrowers and directors, legislative requirements concerning AML/CTF verifications must be met. What checks would you complete to meet these requirements and what would be two (2) possible impacts if you did not complete these checks.
Student response to Task 4: Question 3
| Answer here |
Task 4: Question 4
In Task 1 you identified potential risks for Case study 2, Bill Smith and John Jones.
Choose three (3) risks that you identified and develop recommendations on risk management strategies that would help to mitigate these risks.
Student response to Task 4: Question 4
| Answer here |
Task 4: Question 5
Following your review of the borrower’s financial position, compare their current and future outgoing commitments once the new loan is initially in place.
(a) What are the two (2) key impacts/changes to their cashflow?
(b) What is the change in the amount of their outgoing commitments? Demonstrate how you arrived at this figure.
Please note: you are not expected to discuss any GST or taxation implications.
Student response to Task 4: Question 5
| (a) Answer here
(b) Answer here |
Task 4: Question 6
(a) Refer to Task 3 and list at least two (2) of the security instruments to be used for this transaction.
(b) What would the impacts be for the individuals and/or companies if the lender was to call upon the securities?
Student response to Task 4: Question 6
| Answer here |
Task 4: Question 7
Provide two (2) examples of any legal, financial or other issues that the client should be aware of when applying for credit in the name of a trust — for example, additional documentation that may be required, taxation issues or fees.
Hint/Tip:
Refer to the Toolbox for a helpful link about trusts.
Student response to Task 4: Question 7
| Answer here |
(Task 4 questions 1-7: 500 words)
Notes: To complete this task you will need to refer to the Toolbox and sections True Blue Pty Ltd trading as True Blue Real Estate and ‘Lending organisation’s guidelines, policies and procedures, Legislative requirements, Loan verification and audit standards’ document found in the Toolbox. You may also need to conduct your own independent research to answer these questions.
Assessor feedback for Section 2: Task 4 — Detailing analysis findings:
| [insert feedback] | |
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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Resubmission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Section 3: Case Study 3 — Rahn and Deepa Singh –
Property Development Finance
The case study can be located in the Subject room
Task 1— Identify the clients’ complex broking needs
Task 1: Question 1
It is the broker’s responsibility to understand the client’s business, potential risks, their history, experience and business performance. You will also need to understand specific aspects of the transaction such as their intended goals, objectives and requirements in purchasing the property.
Prepare a list of questions that you would ask Rahn and Deepa in order to gather information in preparation of the loan application for their investment property development.
Your questions should uncover the following areas:
• their future goals, employment history, experience in project management, financial position, attitude to risks and the property purchase
• the complex features of the proposed construction financing transaction and options for 100% funding
• the identification of potential risks involved with construction loans and Rahn and Deepa ’s tolerance for risk
• the financial aspects of the transaction including, progressive payments and cost over-runs
• the financial position of the borrowers and their capacity to meet project costs
• experience in managing a construction project and whether they intend to use other building specialists or project managers
• the customers intention to undertake another project after completion
• the customer’s plans for management of the rental and sale of one unit
if the project exceeds the projected amounts, how would they manage the extra costs.
(800 words)
Student response to Task 1: Question 1
| Answer here |
Assessor feedback for Section 3: Task 1 — Identify the clients’ complex broking needs:
| [insert feedback] | |
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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Resubmission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Task 2 — Prepare complex broking options
You are required to prepare a proposal for Rahn and Deepa outlining the loan approval process and the transaction risks they should be aware of.
Prepare the proposal document, in a suitable format, and explain the consumer loan options available to Rahn and Deepa. Outline the process that will need to take place for them to complete the purchase of the property and construction of the three units.
In developing your report, you should cover the following:
1. Who the parties to the loans are.
2. Provide Rahn and Deepa with two initial loan products that would meet their requirements.
Option 1: Residential home loan secured by the family home to provide the required equity
Option 2: Property development loan to assist with purchase of land and construction.
3. Your recommendation for the best loan structure option for each loan, including:
• amounts
• security/collateral for each loan
• terms
• repayment types
• LVRs for each loan
• explanation why each of the loans are suitable for the clients.
4. Provide Rahn and Deepa with a preliminary assessment, as required under your regulatory responsible lending obligations, outlining the three (3) lenders that provide the product required to facilitate this transaction, and advise the client of the product type, loan term, interest rate, ongoing fees and monthly repayment for each of the products.
5. Describe the procedure, from initial interview to unconditional loan approval, including documentation required from Rahn and Deepa . Ensure you mention the compliance documents you need to complete.
6. Describe the client responsibilities, so Rahn and Deepa understand the facilities being proposed.
7. Outline the risks (potential and real) of which Rahn and Deepa should be made aware of, including using their own home as security.
8. Prepare a full funding description including a summary of fees and charges for the initial purchase of the land through to completion of project. Ensure you include the costs for setup and those of the lender.
9. Prepare a time line for the project detailing payments and where funds will be obtained from.
10. A request for the client to inform you of any questions about the transaction and/or provide an instruction for you to proceed.
11. Advise which relevant disclosures need to be made regarding broker remuneration.
(800 words)
Notes: Any assumptions you make should be listed, and not be in conflict with the case study information already provided.
You are to write a report to clients demonstrating your professional writing skill, not simply commenting on each of the points detailed above.
The use of tables in the report, to set out some of the numeric information, may be of benefit.
Student response to Task 2
Answer here
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Assessor feedback for Section 3: Task 2 — Prepare complex broking options
| [insert feedback] | |
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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Resubmission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Task 3 — Implement complex loan structures
Rahn and Deepa have accepted your recommendations and have given you authority to proceed with their application.
As part of implementing their loan application you are required to prepare a formal written loan submission to the lender for pre-approval.
Note: Lender templates, credit policies and submission requirements vary from lender to lender. For this task, you can use the template called ‘Credit Memorandum’ (or follow the structure as a guide) and/or any of the other example tables provided in the Toolbox.
Your loan submission must include:
• details of borrower and their contact details
• borrowers’ backgrounds including ability to manage project or possible use of building expert
• an overview of the proposal — what the finance is for the proposed structure and loan recommended. Include:
– product types
– deposit amount (if required)
– loan amounts
– terms
– interest rates
– interest repayments
• full details of the security being offered
• a funds-to-complete table, include statutory costs and any relevant fees
– the loan for the two remaining units (loan amount will be 80% of the completion value)
– outline the debt servicing position
– the projected rental income
– interest only repayments
– the security and LVR position
• a highlight the relevant risks. Include transactional, economic and personal risks and how they can be mitigated
• any other information that is relevant to assist the lender provide an approval
• your comments and recommendations
• a list of the documents that you would attach in your written submission. (You can assume that you have all of the necessary approvals for the construction and have obtained a valuation).
(800 words)
Notes: Any assumptions you make should be listed, and not be in conflict with the case study information already provided.
You are to write a formal submission to the lender, or complete a word document template and copy and paste into the student response box.
Student response to Task 3
| Answer here |
Assessor feedback for Section 3: Task 3 — Implement complex loan structures:
| [insert feedback] | |
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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Resubmission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Task 4 — Verification of applicant’s financial situation
When a consumer loan falls under the protection of the National Consumer Credit Protection Act 2009 (NCCP Act), there are disclosure obligations that the broker must abide by.
Assume the following:
Rahn and Deepa’s loan falls under the NCCP Act.
You are about to provide the client with credit assistance.
You are going to charge them a fee for your service.
Task 4: Question 1
What are the two (2) disclosure documents that you must provide to the client at the initial meeting?
(4 words)
Hint/Tip:
Refer to the Toolbox for a helpful link under the heading Responsible lending obligations
Student response to Task 4: Question 1
| Answer here |
Task 4: Question 2
In order for you to collect and store client information and conduct a credit check, what document would you need to get signed by the client?
(10 words)
Student response to Task 4: Question 2
| Answer here |
Task 4: Question 3
Your client has advised you that they are not sure what the term ‘cross-collateralisation’ means. Explain what cross-collateralisation means to the client.
(50 words)
Hint/Tip:
Refer to the topic notes
Student response to Task 4: Question 3
| Answer here |
Task 4: Question 4
Given that Rahn and Deepa want to equally own the new property, claim taxation benefits and maintain ownership if one party passes away, how should they register their ownership interest on the Certificate of Title?
(10 words)
Hint/Tip:
Refer to the Toolbox for a helpful link
Student response to Task 4: Question 4
| Answer here |
Task 4: Question 5
In Task 1 you identified risks that concern Rahn and Deepa’s property development proposal. From the list of risks you identified, choose two (2) risks and discuss the following, namely:
(a) why you feel it is a risk to the client and/or the lender
(b) if the risk was to eventuate, what could be the potential consequences for the clients and/or the lender
(c) your suggestions for how these risks can be mitigated.
(20 words)
Student response to Task 4: Question 5
| (a) Answer here
(b) Answer here
(c) Answer here |
Note: You may also need to conduct your own independent research to answer these questions.
Assessor feedback for Section 3: Task 4 — Detailing Analysis Findings:
| [insert feedback] | |
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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Resubmission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Section 4: Complex Lending and Broking
— Identifying, developing, presenting and implementing complex broking options
Task 1 — Complex collateral (specialised security)
Task 1: Question 1
(a) Explain what the risks are for a lender with taking rural land as security. Provide one (1) example.
(b) Explain what the risks are for the client with purchasing rural land. Provide one (1) example.
(50 words)
Student response to Task 1: Question 1
| (a) Answer here
(b) Answer here |
Task 1: Question 2
(a) Some properties are heritage listed. Explain what this means.
(b) Explain one (1) risk for the purchaser with buying a heritage listed property.
(c) Explain one (1) risk for the lender with taking a heritage listed property as security.
(100 words)
Student response to Task 1: Question 2
| (a) Answer here
(b) Answer here
(c) Answer here |
Task 1: Question 3
Describe the purpose of an Environmental Site Assessment (ESA) and explain the main steps involved in producing an ESA.
(80 words)
Student response to Task 1: Question 3
| Answer here |
Task 1: Question 4
(a) Explain how an Indigenous Land Use Agreement (ILUA) might assist with the acquisition of land subject to native title.
(b) What is one (1) limitation of an Indigenous Land Use Agreement?
(50 words)
Student response to Task 1: Question 4
| (a) Answer here
(b) Answer here |
Task 1: Question 5
When borrowing against specialised security, there are often impacts such as additional loan approval processes that are required. Describe two (2) additional processes that may impact a loan application when borrowing against specialised security.
(100 words)
Student response to Task 1: Question 5
| Answer here |
Assessor feedback for Section 4: Task 1 — Complex collateral (specialised security):
| [insert feedback] | |
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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Resubmission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Task 2 — Complex loan structures
Task 2: Question 1
(a) List three (3) types of loan transactions that may be considered to be complex loans.
(b) Provide two (2) examples of how a client’s application with special financial circumstances (such as offering a specialised property as security or requiring a complex loan structure) might be impacted.
For example, additional requirements made by the lender.
(50 words)
Student response to Task 2: Question 1
| (a) Answer here
(b) Answer here |
Task 2: Question 2
Explain how lending limits may be impacted for loans secured by rural property.
(100 words)
Hint/Tip:
Refer to your topic notes to answer this question
Student response to Task 2: Question 2
| Answer here |
Task 2: Question 3
(a) Provide one (1) example of when a client may require a bridging loan.
(b) List and explain two (2) risks for the client when obtaining a bridging loan.
(75 words)
Hint/Tip:
In addition to the topic notes, you may be required to undertake your own research. There is a link provided in the Toolbox.
Student response to Task 2: Question 3
| (a) Answer here
(b) Answer here |
Task 2: Question 4
(a) Provide one (1) example of when a client may require an equity release product (e.g. reverse mortgage).
(b) What three (3) factors are taken into consideration when determining how much the client can access with this type of lending?
(75 words)
Hint/Tip:
In addition to the topic notes, you may be required to undertake your own research. There is a link provided in the Toolbox.
Student response to Task 2: Question 4
| (a) Answer here
(b) Answer here |
Task 2: Question 5
List the supporting documentation you would request from a business client that you would need to forward to the lender along with loan application. (List a minimum of four (4))
(20 words)
Student response to Task 2: Question 5
| Answer here |
Task 2: Question 6
(a) As a broker you can assist the client and the lender with the loan implementation process. List a minimum of seven (7) steps that you (as the broker) can take to assist with the loan submission, from collection of supporting documentation through to the collection of fees and settlement or loan draw down.
(b) What steps can you take to ensure the privacy of your client’s information when sending and storing their supporting documents and loan application details?
(100 words)
Hint/Tip:
Refer to your topic notes for the suggested Implementation steps
Student response to Task 2: Question 6
| (a) Answer here
(b) Answer here |
Task 2: Question 7
The implementation process can take time, organisation and require follow up. This part of the process is vital for cementing the relationship with both the client and lender.
What time management tools and techniques can you use to support the implementation process to ensure it runs smoothly and is completed on time for your client and the lender? (Provide at least two (2))
(20 words)
Hint/Tip:
Refer to the Toolbox for a helpful link.
Student response to Task 2: Question 7
| Answer here |
Assessor feedback for Section 4: Task 2 — Complex loan structures:
| [insert feedback] | |
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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Resubmission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Task 3 — Legislation and codes of practice
Task 3: Question 1
(a) Identify the Legislation that amends the National Credit Code, which provides negative equity protection for reverse mortgage borrowers.
(b) Explain what protection is provided to those consumers.
Student response to Task 3: Question 1
| (a) Answer here
(b) Answer here |
Task 3: Question 2
Briefly describe what a finance and mortgage broker’s obligations are under best interests duty.
Hint/Tip:
Refer to the Toolbox
(40 words)
Student response to Task 3: Question 2
| Answer here |
Task 3: Question 3
Write an email to a client outlining the complaints resolution process in accordance with the Australian Financial Complaints Authority (AFCA). (Ensure that you outline what AFCA encourages clients to do before making a complaint to them.)
(100 words)
Hint/Tip:
Refer to the Toolbox for a link to AFCA.
The purpose of this task is to communicate the complaints resolution process to the client. Therefore, it is important that your response is in an email format.
Student response to Task 3: Question 3
| Answer here |
Assessor feedback for Section 4: Task 3 — Legislation and codes of practice:
| [insert feedback] | |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Section 5: Ethical decision-making frameworks and principles
Before you begin this Topic, you will be required to read the case study which is located in the subject room.
Task 1 – Frame the ethical question applicable to the situation
Task 1: Question 1
Investigate whether the assumptions and client advice provided by the broker in “Scenario A”, align with industry practice.
(50 words)
Student response to Task 1: Question 1
| Answer here |
Task 1: Question 2
Identify the two (2) ethical principles that arise in each of the three (3) scenarios from the case study and list them in the table below.
Student response to Task 1: Question 2
| Answer here
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Task 1: Question 3
The lender in Scenario A became aware of the broker’s instructions to the clients and advised the broker that his actions were not acceptable.
In their defence, the broker stated that they had, ‘heard that this was the right thing to do at a professional development day that I attended in the past’ and that ‘I confirmed this by asking other brokers who agreed with my actions’.
Identify at least two biases that are revealed in the statements made by the broker and explain how they might impact the broker’s understanding of the situation.
(50 words)
Student response to Task 1: Question 3
| Answer here |
Task 1: Question 4
Explain what regulatory requirements may be breached if the situation in ‘Scenario B’ was not addressed?
(20 words)
Student response to Task 1: Question 4
| Answer here |
Task 1: Question 5
Many organisations have a vision and/or mission statement and a set of values that are visible on their website to the public and their clients.
The ethical situation that arises in ‘Scenario B’ has the potential to be in conflict a lender’s purpose and values.
Identify two (2) examples where the situation in ‘Scenario B’ could be in conflict with an organisation’s strategy, purpose and/or values.
Hint/Tip:
For this task you may use Westpac’s Strategy and Purpose. A link has been provided and can be located in the Toolbox.
(20 words)
Student response to Task 1: Question 5
| Answer here |
Task 1: Question 6
Scenario B resulted in the clients lodging a complaint with the Australian Financial Complaints Authority, (AFCA), against both the lender and the broker.
Evaluate the possible impact on the lenders’ reputation if the action of cancelling the loan became known in the public domain. Explain how the organisation at fault could be impacted.
(50 words)
Student response to Task 1: Question 6
| Answer here |
Assessor feedback for Section 5: Task 1 — Frame the ethical question applicable to the situation:
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Task 2 – Determine ethical response to the situation
Task 2: Question 1
‘Scenario A’ resulted in the client’s defaulting on their home loan 12 months after settlement as it took them several months to find new employment. Each party to the transaction claimed that they received poor advice from the broker.
Identify the key stakeholders (parties) and analyse what is at stake for each of them.
(100 words)
Student response to Task 2: Question 1
| Answer here |
Task 2: Question 2
You have been asked to determine an ethical response to ‘Scenario B’. You are required to analyse the situation using the ‘RADAR’ ethical decision-making framework. Your response must include commentary on each aspect of this framework as follows:-
Recognising the event
Assessing the situation
Deciding what to do
Agreeing the way forward
Reporting
(150 words)
Hint/Tip:
The framework can be located in your Topic notes and a helpful link is also provided in the Toolbox.
Student response to Task 2: Question 2
| Answer here |
Task 2: Question 3
The broker in ‘Scenario A’ was interviewed about his actions and made the following comments:
“Most of my business is settled with this particular lender and the loans manager is a personal friend of mine. There is nothing unusual about the way I handled this situation. I’m not that comfortable dealing with clients this way, but it’s the way brokers operate. I know this is true because my mentor didn’t see anything wrong by not notifying the lender”.
Identify the situational and/or psychological barriers that may have impeded the broker’s response to this ethical situation by listing a minimum of two (2) examples of conflict of interest and at least two (2) examples of where the broker’s views were biased.
(50 words)
Student response to Task 2: Question 3
| Answer here
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Task 2: Question 4
You have been asked to determine an ethical response to ‘Scenario A’ having now heard what the broker has had to say about his actions at question 2.3 above. Name at least two (2) people or organisations you might seek guidance from as you would consider them to be ethical advisers.
(10 words)
Student response to Task 2: Question 4
Answer here
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Task 2: Question 5
Describe the strategies and processes you would formulate for responding to the situational and psychological barriers you identified in Question 2.3 above.
(80 words)
Student response to Task 2: Question 5
| Answer here
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Assessor feedback for Section 5: Task 2 — Determine ethical response to the situation:
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Task 3 – Develop implementation plan and carry out ethical response to the situation
As the compliance manager for the lender, you have been asked to implement an ethical response to Scenario B in order to set out what conduct is expected across the broker network.
Important:
Although you will need to consider the ethical situation described in Scenario B, the focus of your response to the following questions needs to be on developing a plan to implement changes within the lender organisation and the broker network. You are required to develop an implementation plan, as follows:
Task 3: Question 1
Identify:
(a) what data needs to be gathered.
(b) which parties you will need to communicate with
(c) the sequence of the steps that you will take to complete these tasks.
(75 words)
Student response to Task 3: Question 1
| Answer here |
Task 3: Question 2
Identify a minimum of three (3) examples of reasoning or rationalisation that may be encountered by someone speaking up on ethical issues and suggest how you would respond to those behaviours.
(25 words)
Student response to Task 3: Question 2
| Answer here
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Task 3: Question 3
As stakeholders may be impacted by an ethical response, it is important to manage stakeholder risks and concerns that might arise during this process.
(a) Identify the four (4) steps in the stakeholder risk management process and outline the key objectives of each step in the table below.
(b) Describe the communication strategies that you would use to ensure that the risks are mitigaged and that your stakeholder’s concerns are acknowledged.
(50 words)
Hint/Tip:
Refer to your Topic notes.
Student response to Task 3: Question 3
(a) Answer here
(b) Answer here
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Task 3: Question 4
(a) Under what circumstances would you seek support from a trusted colleague in order to effectively carry out the ethical response? Provide three (3) examples in the table below.
(b) Under what circumstances would you act independently in order to effectively carry out the ethical response? Provide a minimum of three (3) in the table below.
(20 words)
Student response to Task 3: Question 4
(a)
(b)
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Assessor feedback for Section 5: Task 3 — Develop implementation plan and carry out ethical response to the situation:
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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Resubmission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Task 4 – Evaluate the outcomes of the ethical response
Case Study:
One of Peta’s most important customers called yesterday seeking an explanation for the delay in receiving a valuation report for a loan application he had lodged last week. Peta had asked a colleague Alex to order a valuation (normally completed within five days), but it had not arrived.
When Peta asked Alex whether the valuation instructions had been issued, Alex said, “I sent them by email to the valuer a week ago”. Later, as Peta passed Alex’s desk and “woke” the laptop from the screensaver, Peta could clearly see that the email was sent just two days ago. This was typical of the poor customer service provided by the organisation due to ongoing problems with staff levels and it is not the first time Alex had been dishonest in order to cover up mistakes.
However, Peta knew that Alex’s job was at risk and decided the right thing to do was to protect her colleague by calling the client back with the news that the valuer had received the instructions but had not yet completed the valuation report. As Peta talked with the client, she learned that the delay of the valuation had resulted in the loss of the client’s opportunity to purchase the property.
Peta later heard from the manager that the client had complained and decided to not use the mortgage broking services provided by the organisation in future. Peta listened carefully when her manager later expressed his confusion on how this client’s attitude towards him had been hostile. Peta, knowing that both Alex and her own jobs were now at risk, said nothing in response.
Task 4: Question 1
(a) Identify a minimum of three (3) ethical situations/actions described in the case study.
(b) Evaluate whether the issues were resolved and if other courses of action should have been taken.
(50 words)
Student response to Task 4: Question 1
| Answer here |
Task 4: Question 2
Determine the consequences for Peta and the other affected parties from the actions she took.
(30 words)
Student response to Task 4: Question 2
| Answer here |
Task 4: Question 3
Analyse what the outcomes of Peta’s actions reveal about her own and the organisation’s values.
(25 words)
Student response to Task 4: Question 3
| Answer here |
Task 4: Question 4
Identify improved approaches for responding to future ethical situations that might arise from the circumstances described in the case study.
(25 words)
Student response to Task 4: Question 4
| Answer here |
Assessor feedback for Section 5: Task 4 — Evaluate the outcomes of the ethical response:
| [insert feedback] | |
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Date assessed: |
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Does the student need to resubmit? |
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Questions that need to be resubmitted |
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First submission |
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Resubmission |
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
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