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ASIC sounds off on living expenses controversy

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Julia Corderoy | 03 Dec 2015, 08:00 AM Agree 0
A senior ASIC executive has confirmed whether brokers and lenders should be obtaining bank statements and credit card statements to verify a consumer's living expenses
  • joker | 03 Dec 2015, 10:00 AM Agree 0
    What a joke,I don't even know how much I would spend every month. If a customer living with parents and parents offer accommodation and food and everything do we take 0 as living expense?
  • MCC | 03 Dec 2015, 10:25 AM Agree 0
    Use the "fact find" budget tool that most aggregators / regulators have already supplied - get your client to sign & date that document. Use that living expense regardless - this can add some time to the interview process but IT GETS IT RIGHT! End of story.
  • Papery | 03 Dec 2015, 10:30 AM Agree 0
    Suncorp & Connective... Please note the above.

    Sounds to me that as NCCP originally stated... Enquiries brokers need make are scalable subject to the merits of each applicant/application.

    Time to put the genie back in the bottle & stop the panic!
  • QEDRisk | 03 Dec 2015, 10:35 AM Agree 0
    Thank you, Michael. Think you guys there need to all compare notes and be reading the same lines!

    Everyone calm down again :)
  • Aged Broker | 03 Dec 2015, 12:44 PM Agree 0
    Lets use Hems, no lets use customer estimate, no lets use Hems. no lets use customer estimate, no lets...
  • Richard | 03 Dec 2015, 02:12 PM Agree 0
    We operate in an industry FULL of scaremonger's and this is a classic example, talk first and find out the facts later. Once again the two industry bodies are out at lunch with nothing to contribute!!!
  • Peter | 03 Dec 2015, 02:31 PM Agree 0
    Some brokers have told ne the borrowers guess their living expenses and when added up they exceed what they earn. Guidelines are best depending on what the clients earn. The experience is that clients either don't really know or are desperate to get the loan so lie. Brokers should remember that if it comes to an audit ASIC has the belief that all brokers lie and clients don't so make sure you get the clients to sign their budget estimates.
  • Steve McClure | 03 Dec 2015, 05:56 PM Agree 0
    The more onus placed on the broker to substantiate every facet, the more our liability increases. Keep in mind that the NCCP legislation means that just because a customer signs something, doesn't remove the broker from liability. The test is if the broker would have or "should have" known something that the borrower doesn't disclose.

    I can foresee a claim where a borrower says they were misled to sign an expense statement - and the broker that conducted the interview should have known better.

    I've never seen a Lender's online (direct to consumer) application ask for specific expenses, just an estimate.
  • John Sanders | 04 Dec 2015, 08:49 AM Agree 0
    The company I work for goes to great lengths to cover themselves from a compliance perspective.

    We have the client fill out a very extensive form that not only looks at their assets and liabilities etc but goes into great detail about their lifestyle expenses and then the client signs off on it.

    In many cases it is a deal killer as a lot of clients cannot be bothered filling out too many forms.

    I know compliance is important but some businesses are now paranoid and scared and it leaves brokers with numerous deals that just dissolve.
  • CJ | 04 Dec 2015, 11:09 AM Agree 0
    Joker - that's a really silly comment. So your customer living with parents doesn't have a mobile, doesn't drive/take the train, doesn't go out to dinner/clubs with friends, buy clothes, go to the gym, have a football membership, take a holiday with friends/girlfriend etc etc?

    This whole idea around living expenses is just basic common sense. Download a budget calculator from the net, organise an excel spread-sheet & send it to your customers to fill in. Not rocket science.
  • SEQ BROKER | 04 Dec 2015, 11:37 AM Agree 0
    ASIC, ease off.

    We already have a situation where one mortgage insurer and some lenders wont publish servicing calcs. Today I had the HEM go up on a loan at STGeorge where the client was advised of borrowing capacity, then went and signed a contract based on that capacity and now the HEM (living expenses) go up and the client can no longer borrow sufficient funds to complete. All our pre approvals are now worthless and brokers are simply wasting their time.
    ASIC you are not succeeding in your compliance goals, us brokers dont want to do a loan for someone who cant afford it. We like the NCCP. But you going about with your implied threats, worrying the industry, causing brokers to offer less of a professional service because we can not identify a customers servicing or at least what it will be tomorrow IT IS COSTING US MONEY.

    Over the past 10 years, Brokers have been able to confidently assess a borrowers capacity and submit a loan with confidence making our service (which is free in most cases to the borrower) very accurate, professional and reliable. ASIC your unconsidered and ill advised actions are impinging on that. Brokers are currently doing 52% of residential mortgage lending. Cynically, is this an attempt to drive borrowers to more costly direct bank loans. Or are you so concerned about your own jobs you want to threaten mine?
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