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.