A credit guide tells a mortgage broker’s client who provides the credit assistance, what fees and commissions apply and how to make a complaint. Give it as soon as practicable once it becomes apparent you are likely to provide credit assistance.
The written guide must also identify the credit providers the licensee does most business with. Keep the document accurate as your business and lender mix change.
What Goes in a Credit Guide
Section 113 of the National Consumer Credit Protection Act 2009 sets out the licensee’s credit guide requirements. Use the following checklist against your compliance template.
- Include the licensee’s name, contact details and Australian credit licence number. These details let clients identify the business responsible for their credit assistance. If you are a credit representative, your guide also needs the representative details required by section 158. Your licence or appointment arrangement determines which template applies.
- Explain the fees and charges clients may pay you for credit assistance and related services, including how you work them out. Keep those descriptions consistent with what you actually charge.
- Describe the commissions and other indirect remuneration covered by the Act, including a reasonable estimate or range and how the amounts are calculated. This covers payments likely to reach the licensee or its employees, directors or credit representatives, directly or indirectly.
- Name every credit provider the licensee conducts business with if there are six or fewer. If there are more, name the six with whom the licensee reasonably believes it conducts the most business. This is the rule in section 113(2)(f). The Act does not prescribe a previous-financial-year measurement period.
- Explain the internal dispute resolution procedure and give the contact details clients need to use it. Include access details for the Australian Financial Complaints Authority (AFCA) scheme. The mortgage broker complaint process explains how internal complaints and AFCA fit together.
- Explain the licensee’s obligations to provide a copy of the preliminary assessment on request and to avoid suggesting or assisting with unsuitable credit contracts. Section 113 points to sections 120 and 123 for these obligations.
Credit representatives have their own content requirements under section 158 and regulation 27A. A combined licensee and representative guide can affect which lender details need repeating. Use the template approved for your arrangement.
When You Must Give the Credit Guide
Give the credit guide as soon as practicable after it becomes apparent that you are likely to provide credit assistance. Sending it with the first appointment confirmation makes it part of preparing for the initial mortgage consultation.
Do not hold it until the fact-find or application documents come back. For example, if you agree to help a client seek a home loan, waiting for completed paperwork can delay the guide beyond the statutory trigger.
Regulation 28P(2) provides a repeat-client exemption where you gave the consumer your credit guide in accordance with the Act within the previous 12 months. If you were required to give AFCA access contact details, those details must not have changed. Check both conditions in the National Consumer Credit Protection Regulations 2010 before relying on the exemption.
Keeping Your Guide Accurate
Review your guide whenever licence details, fees, commissions, ownership or AFCA membership change. Recheck it at least annually against the Australian Securities and Investments Commission (ASIC) responsible lending disclosure guidance and your licensee’s requirements.
Give the top-lender list its own annual review after each financial year. Review the previous year’s business to help identify changes, then confirm the list still meets the Act’s most-business rule. Update it when the named lenders change. Treat the annual review as a maintenance routine, not a statutory measurement period.
Keep an approved current version where everyone who sends appointment confirmations can find it. Archive earlier versions with their period of use so you can identify the document a particular client received.
Writing a Guide Clients Actually Read
Explain charges and the complaint route in language a client can understand without a broking background. A client who understands these details is less likely to feel misled when a fee question arises years later.
Separate a fee the client pays from a commission paid by a lender. Explain how the amount is worked out and who receives it. Put complaint contact details where the client can find them without searching through unrelated disclosures.
Creating and Maintaining Yours
Start with your licensee’s or aggregator’s compliance template and adapt it through the licensee’s approval process. Confirm that its descriptions match your business instead of assuming every field applies unchanged.
The credit guide is separate from the quote required before providing credit assistance where you charge a fee, and the credit proposal disclosure document given with the assistance. Sections 114 and 121 set out those separate requirements. Obtain acceptance of the required quote and give the client a copy before providing the assistance. Section 114 also prohibits demanding payment for credit assistance before providing it.
Record when and how each client received the guide, together with the version sent. Save the delivery evidence in the client file so a later question can be checked against the actual document.
Before your next appointment, check four items in the guide.
- Confirm the licence number and representative details match your current arrangement.
- Check that fee and commission descriptions match what you charge and receive.
- Confirm the internal complaint and AFCA access details are correct.
- Check that the credit-provider names meet the six-or-fewer or six-most-used rule.
Send any changes to your licensee for approval, replace the version used by your team and retain a record of when the replacement took effect.
Credit Guide Template
Copy this credit guide template into an editable document and complete the empty fields. Use your licensee’s approved wording for your particular business and representative arrangement.
Credit guide
Business and licence details
Business trading name:
Licensee legal name:
Licensee contact address:
Licensee telephone and email:
Australian credit licence number:
Credit representative name and number, if applicable:
Credit representative contact details, if applicable:
Authorising licensee details, if applicable:
Fees and remuneration
Fees and charges payable by the client:
Services covered by those fees:
How each fee is calculated:
Commission and other indirect remuneration:
Who pays and receives that remuneration:
Reasonable estimate or range and calculation method:
Credit providers
Credit providers required by the six-or-fewer or six-most-business rule:
Other representative-specific disclosures required by the approved template:
Our lending obligations
Our obligations concerning unsuitable credit contracts:
How to request a copy of the preliminary assessment:
Complaints
Internal complaint procedure:
Complaint contact name or team:
Complaint telephone, email and postal address:
AFCA access contact details:
Document control
Version:
Effective date:
Licensee approval:
Fill every applicable field with the actual details and explanations. State when a fee does not apply instead of leaving its field empty.
Check the completed document against the statutory checklist above and your licensee’s representative requirements. Obtain the licensee’s approval before sending it to a client.
