Borrower education 'fundamental' for brokers

by Adam Smith18 Jun 2012

Educating borrowers is set to become a 'fundamental part of the mortgage process' according to one industry consultant.

Industry commentator Kym Dalton has again claimed that many borrowers have limited knowledge the meaning of mortgage products and terms, and that merely satisfying NCCP disclosure requirements may not be enough to keep brokers safe.

"Disclosure and comprehension are not the same," he said. "Borrowers are frequently nervous about asking questions when applying for a loan, in case it jeopardises their application."

With this in mind, Dalton has launched an online learning program for borrowers he said will help ensure comprehension and protect brokers and lenders. Dalton said the program, CreditED, will be delivered online in a series of seven animated episodes, each with a mini quiz to ensure comprehension.

"CreditED is like the road rules for borrowing. It would be unusual to sell a consumer a high powered car without first making sure they knew their road rules or had a driver's licence," he said.

Dalton said the goal of the program was "the measurement of comprehension", and claimed it would serve to enhance the disclosure and advice already offered by brokers.

"It will build trust, enabling borrowers to approach credit with increased confidence. Via measured comprehension, credit professionals can have the confidence that their customers understand the responsibilities that come with taking out mortgage loans. CreditED will lessen customer complaints, augment fact finds and provide greater certainty around disclosure," he said.


  • by stormy waters 18/06/2012 10:58:32 AM

    "It would be unusual to sell a consumer a high powered car without first making sure they knew their road rules or had a driver's licence"...good attempt at an analogy, but I've bought a few cars in my time (some of them with many horses under the hood) and have never been specifically asked for my driver licence, just ID. Testing consumers knowledge will be a turn off, but educating consumers about their loan and the options available is always warranted.

  • by Jeff Mazzini- AAMC Training Group 18/06/2012 12:14:00 PM

    I believe it is compulsory in the USA for borrowers to attend a half day training course and I feel it will also become compulsory in Australia for borrowers to undertake education as well, given we have a low level of numeracy and literacy skills within the country.
    I have viewed the software and fully support its use to ensure that consumers are educated and have a full understanding of their roles and responsibilities they also play when borrowing money. Imagine when the consumer can no longer say I did not know what I was signing for, maybe PI may even reduce in due course.
    I feel this is the first step in the ongoing up skilling of borrowers and there are many other exciting things to follow this and other initiatives currently been worked on.