Best Interest Duty Policy (BID)
N1 Holdings Ltd including its associated subsidiaries ("N1") BID covers ONLY any loan where the credit is provided wholly or predominantly for personal, domestics or household purposes, or to purchase, renovate or improve residential property for investment purposes, or to refinance credit previously provided for this purpose, including asset
finance to consumers. Noted, excludes business purpose loans.
The best interests’ obligations will apply to N1 “mortgage brokers”, a term which is now defined in the National Consumer Credit Protection Act 2009 (Cth) (Credit Act) as:
1. A credit licensee or credit representative who carries on a business of providing credit assistance in relation to credit contracts offered by more than one credit provider that are secured by mortgages over residential property,
2. And does not perform the obligations or exercise the rights of a credit provider in relation to the majority of those credit contracts.
Key Points Of Best Interests Duty Regulations
1. N1 must act in the best interests of consumers in relation to credit assistance and credit or loan contracts;
2. Where there is a conflict of interest, N1 must give priority to consumers in providing credit assistance in relation to credit or loan contracts;
3. N1 must manage conflicts of interest. When exists, disclose to customers and always give priority to their needs.
BID Expectations and Code of Conduct
1. To comply with the Conflict Priority Rule (CPR)
2. Resolve conflicts in the interest of the consumers, demonstrated by disclosure and articulation of consumers benefits
3. To demonstrate transparency in providing information and recommendation to consumers
4. To demonstrate knowledge, skills, and qualifications with the aim to deliver outstanding results for consumers
5. To respect and maintain privacy
6. To support communities and be environmentally responsible
Process to Meet BID
1. Gathering Information
2. Conduct Individual Assessment
3. Disclosure, Present information and Recommendations
4. Educate and equip consumers to make informed decisions
Note: Making recommendations would typically involve suggesting that a consumer apply for a particular credit contract, and therefore involve credit assistance, includes making recommendations or assisting a consumer to refinance an existing loan. Packaged Products Consideration.
Recommendations to consumers should identify and consider, for each product within the package
1. How those products will meet the consumer’s needs, objectives, priorities and preferences;
2. Whether (and why) suggesting the consumer take out that product, as part of a package, would be in the consumer’s best interests; and
3. Compare packaged products to standalone home loans without other packaged credit products such as credit card.
Promotional offers includes:
1. Cash rebate or points rewards;
2. Waived or reduced fees; or
3. Discounted interest rate
If the costs / savings of a promotional offer is quantifiable, this will need be considered as part of the cost analysis of the credit product.
1. Cost Benefits analysis including total costs over the new loan term
2. Detailed benefits from refinancing
3. If benefits not quantifiable, the rationale must be clearly explained and justified.