When sourcing a bike loan or even making a general enquiry, you will want to be as well-informed as possible to fully understand your consumer rights and responsibilities of the lender in providing you with the required information. In this educational article, we are providing much of that information around the regulations, obligations and legislation involved with consumer finance.
Jade Bike Loans consistently emphasises the streamlined way that we provide bike loans and how we save our customers time. But we fully understand that some people may consider that we ask for a lot of information from them, provide a lot of information and that the process is quite detailed. That can be correct. But the reason we are so thorough and diligent is because we are addressing your best interests and there is a specific process and requirements that we are required to comply with under the law.
As a licenced finance broker, we are categorised as a credit licensee and as such, required to comply with the National Consumer Credit Protection Act 2009 in regard to the responsible lending obligations and conduct. This comes under the auspices of ASIC, Australian Securities and Investment Commission, the official financial regulator.
These regulations affect anyone who is engaging with a consumer finance provider, including bike loans. We’ve unpacked the information from the ASIC website and presented it in a way that we hope you can follow and that it will assist you in your bike loan process. The information extends to some of your rights, what Jade Bike Loans is required to provide you with and a deep dive into our obligations to you under the Responsible Lending Guidelines.
ASIC: The Official Regulator
ASIC is the Government body that is assigned as the official regulator of the financial services sector including consumer finance, and the activities of corporations and companies. Personal bike loans are consumer loans and guidelines around that type of finance is administered by ASIC under the National Consumer Credit Protection Act. The ACT sets the guidelines and the obligations that licenced credit lenders, such as Jade and including banks and other finance companies must adhere to.
Failure to abide by the law, ie misconduct, can attract significant penalties. So if at any stage of your Jade Bike Loans process you think this is involved – remember that your consultant is working to the letter of the law as well as addressing your best interests.
Guidelines for Responsible Lenders
Every business and individual persons that provides consumer finance services is required to be licenced according to ASIC requirements. This category is referred to as credit licensees in the official documents and information. Credit licensees include finance brokers, finance companies and banks. The Jade credit licence number is ACL 484387.
In order to regulate the sector and especially to safeguard consumers, ASIC has strict guidelines that licensees, including Jade Bike Loans, must follow stringently. Credit licensees must comply with the Responsible Lending Conduct Obligations as set out in the Act. In order to comply, credit licenses must establish their individual operating procedures and practices which meet those obligations.
One of, if not, the key obligations is that a credit licensee must not offer a bike loan to a customer, ie enter into a credit contract; or suggest such a credit contract; or help a customer to make application for a credit contact; if that contract is assessed as being unsuitable for that particular customer.
Basically, Jade Bike Loans cannot under any circumstances offer you a bike that loan that is considered through the assessment process, to be unsuitable for you.
In order to comply with that key obligation, credit licensees, specially talking here about Jade Bike Loans, must develop their own set of processes, practices and protocols to ensure compliance. We need to have our stringent processes that all our consultants must follow, to ensure that the bike loan we offer to a customer is not unsuitable.
Obligations of Lenders
We’re providing detail of the obligations of lenders so that you will have a better understanding of the entire bike loan process and appreciate the diligent work of our consultants to safeguard your interests.
The specific obligations are set out by ASIC and fall into two key areas:
- Setting up and stringently implementing definitive processes and practices for verifying, checking and assessing the financial situation of a customer’s suitability to a specific bike loan.
- Disclosing specific information and documentation to the customers so they can understand the services being provided, the costs involved and the specific detail of a loan contract.
Now for the detail of these two areas.
Jade’s Responsible Approach
As required by the ASIC ruling and the Act, Jade has established and implements a Responsible Lending Flow Sheet that meets out obligations under the consumer finance law as responsible lenders. This Flow Sheet is a staged process that our consultants follow diligently when discussing or processing a customer’s bike loan request.
- The flow sheet, in sequential order of the steps undertaken is:
- Credit Guide provided to every customer. Consultants must issue a copy of the official Credit Guide to every person they engage with in discussions around finance. The consultant retains a record of what was sent as confirmation that this step was completed.
- Credit quotes must include a signature where a DOF is proposed. This must form part of the application submission.
- The customer must sign the privacy statements as Jade’s confirmation that the consultant has advised you of issues involved in the sharing of the information you provide with lenders.
- A detailed credit check is undertaken which involves the verification of address; checking the customer’s credit score and credit history; and checking the history of directorships.
- Financial Capacity Check is undertaken which involves verifying information as provided by the customer in regard to their financial situation.
- A verbal check of living expenses is conducted. This enables the consultant to confirm that the the entirety of living expenses has been advised. To confirm that the expenses were discussed and to confirm the expenses themselves, a copy of this document is issued to the customer.
- A ‘Pre Lim’ is completed by the consultant. This is a document that confirms that needs of that customers are being reviewed by that consultant.
- A Credit Proposal is developed and issued to the customer. This document contains information regarding how that consultant is proceeding with that enquiry or that application; it details the total amount of the loan; the repayment schedule proposed; and additional details regarding that bike loan.
- In an instance that a customer requests a balloon be included in a bike loan, the consultant is required to enquire of the customer, how they intend to finalise this amount at the due time.
- The consultant is required to retain thorough detailed notes of every step in the process. The details must include the timeline of interactions including date.
The flow sheet ensures that not only are our Jade Bike Loans consultants meeting the responsible lender obligations but it is your assurance that your best interests are addressed ethically and in a lawful manner.
Obligations of Disclosure
An essential component of the responsible lender regulations is related to disclosure of information to the customer. This applies to all customers that contact Jade Bike Loans, whether making a simple enquiry or proceeding through the entire application process.
ASIC details what specific information, ie documents, lenders must provide to customers in its Responsible Lending Disclosure Obligations section. The documents have been selected as considered essential for customers to have the information needed to understand what credit activities are provided by Jade Bike Loans.
Under the obligations, information must also be provided pertaining to a customer’s rights, to help them understand any contract or offers being made and to assist them in making decisions.
Disclosure information includes:-
Credit Guide: a preliminary document with information about consumer credit in general.
Quote of Service: this document is provided to outline the fees and costs of the services intended to be charged to that customer by that particular credit licensee. This quote must be accepted with the customer’s signature before the loan process can continue.
Proposal Document: information with the costs inclusive of any commissions which may be derived by the credit licensee.
Written Assessment: when a loan is assessed as unsuitable for a customer, a written assessment must be provided to that customer
Jade’s Commitment to Customers
It’s one thing to have to act in a responsible manner under the law. But Jade Bike Loans goes that extra step in making the commitment to customers that we will act in their best interests in an ethical, responsible and professional manner.
Armed with this very comprehensive information, you are hopefully more knowledgeable on consumer finance and if you are seeking quotes or engaging with other banks and lenders, you know the questions to ask to ensure they are compliant as a responsible credit licensee.
If you have any questions around any aspects of consumer finance, please contact Jade Bike Loans and one of our consultants will assist you. Call 1300 000 003