The big four banks have released a new interview guide for use by brokers when introducing loans to participating lenders to “encourage more consistency” in the collection of expenses data.
Following regulatory scrutiny of how borrower expenses are assessed and verified, the major banks have now released The Broker Interview Guide for Regulated Lending Secured by Residential Property for use by brokers when undertaking needs analysis and before introducing loans to the major banks.
The guide reportedly aims to “clarify the minimum level of inquiries participating lenders require brokers to make on their behalf” and provide a means to record the result of the inquiries made for the lender to review.
It contains prescribed inquiries into matters such as the customer’s purpose and product feature preferences, as well as prompts to explain the implications of product choices and features to clients.
As of 30 April, brokers will need to complete the interview guide, which will be uploaded to ApplyOnline and LoanApp platforms.
Those using eLodge and eMOS will also be required to complete and sign the paper-based interview guide and submit it with every application.
The guide must be submitted and signed by both the broker and the customer(s) and must be completed for all applications where a customer is seeking to borrow new or additional funds for a mortgage, refinance existing mortgage loans or consolidate mortgage debt and for all streamlined credit-critical renewals.
Likewise, an acknowledgement must be lodged stating that the broker had asked all the interview guide questions and notified the borrower of the risks associated with their selected loan features should any variations be made to the application post-submission and during the assessment process.
The major banks have asked brokers to refer to their relevant broker portals or contact their BDMs for further information.
A statement from ANZ reads: “As you know, making inquiries into a customer’s requirements and objectives is an integral part of the responsible lending obligations of both lenders and brokers.
“ANZ has worked with a number of other major lenders to develop an industry standard, Broker Interview Guide for Regulated Lending Secured by Residential Property, for use by brokers when introducing loans to participating lenders.”
The bank added that the guide aims to “encourage more consistency in the collection of this information across the industry while maintaining simplicity in your business”.
The major banks have warned that should a submission contain an incomplete interview guide, it may result in assessment delays.
ANZ commented: “As the industry’s work on this initiative evolves, we will continue to work in partnership with you to ensure you are informed in advance where we make further changes.
“Many Australians ask brokers to help them with their home loan. How brokers provide this help is being looked at by various inquiries. We recognise the need for trust in brokers and look forward to [public policy] discussions about measures, like this guide, that will help them continue to deserve that trust.”
The move comes just days after Westpac announced a new process for its expenses process and follows on from increased regulatory attention on expenses.
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry questioned whether credit providers have adequate policies in place to ensure that they comply with “their obligations under the National Credit Act when offering broker-originated home loans to customers, insofar as those policies require them to make reasonable inquiries about the consumer’s requirements and objectives in relation to the credit contract, to make reasonable inquiries about the consumer’s financial situation, and to take reasonable steps to verify the consumer’s financial situation”.
The commission was damning in its critique of the lenders’ policies when it came to ensuring customers can afford their home loans, with ANZ being called out for their “lack of processes in relation to the verification of a customer’s expenses”, and both Westpac and NAB revealing that there had been instances of their staff accepting falsified documentation for loans.
For example, it was revealed that there had been “at least 55 instances of Westpac staff either falsifying or accepting falsified supporting documentation in connection with home and personal loan applications, [and] a number of instances of Westpac staff receiving payments from referrers for the referral of customers to Westpac for loans”; while some NAB staff members were allegedly “charging NAB customers a fee for personal loans… made as cash payments under the table”.