Using COSL Rules To Assess Complaint By Steven Shields

External Stakeholders

• Your business has 6 employees who have all been with the business for 3 years or more. 1 Business Development Manager, 3 loan writers, 1 support officer, 1 administration assistant.
• Premises are owned.
• Spare office space is limited in the current premises.
• Business borrowings:
  • Term loan $200,000
  • Overdraft    $20,000
• Procedure manuals completed when business first opened (never reviewed).
• Monthly workplace inspections are conducted.
• The business operates a company car that is leased.
• All computers are networked and basic virus protection is installed.
• Training of new staff and ongoing training is not well structured and is a bit “hit and miss”.
• Business insurance is current – including personal injury and property damage, fire, storm, malicious damage and other defined events, business vehicle insurance, business interruption, personal accident or illness.
• Audits have not been completed as regularly as needed due to Office Manager being too busy.
• A recent customer satisfaction survey showed excellent results, which has been very positive for the business with a high level of referrals being received.
• Business sponsors the local Under 10’s soccer team and has participated in Clean up Australia day for the last 5 years.
• Aged debtors and creditors listing shows some long overdue accounts.

Answer the following questions using the above scenario:

Please note: The answers provided should relate directly to the scenario and be in your own words to demonstrate your understanding (do not copy directly from the notes). The case study in the learners guide is there to assist in your completion of the assessment.

1. Identify at least 4 external and 3 internal influences:

1. List 5 key business drivers:

1. Cash
2. Profit
3. Assets
4. Growth
5. People

1. Complete a SWOT analysis (provide at least 4 points under each heading)

1. To establish the risk management context provide information for the following steps:

1. Step 1–

Define the

1. organisation,

this is an organization that deals in mortgage broking business and has been in operation for the last five years. 

1. process of activity

mortgage loan prequalification-application of loan-processing and verification.

1. and establish its goals and objectives (use the table below to establish objectives).

1. Step 2– Specify the nature of the decisions that have to be made.

 Routine and operational decisions- This are the decisions that have to be made in regard to the operations of the business.

• Step 3– Define the extent of the project activity or function in terms of time and location.

The company has been in operation for over five years  and the project has come a long way to be fully established in this location.

Question 2 – Identify risks

1. a) List 7 risk identification tools that could be used in the formulation of the risk management plan and discuss reasons for selecting each tool.

• All other risk categories at least tworisks/opportunities

Example of what is required 

A financial risk in the scenario could be that the increase in loans (due to the new development) does not continue because the other mortgage broker in the town attracts more clients.

1. a) From the risks identified in question 2b) complete a risk register for the following risk categories:

1. Financial/economic
2. Operational
3. Compliance/legal

What can happen?  – again relate it to the scenario

Look at what may or may not happen in the business

Eg  loans decrease

How can it happen

List how it might happen – eg the competitor may attract more loans from the new development to his business

Identify existing controls

What has CFF done to identify this risk?  Nothing/something?

Adequacy of existing controls?

Assess whether it is:

• not applicable (if there is no risk control in place)
• effective or
• ineffective

Use the following matrix to analyse the risks:

OR

Extract of Risk Treatment Plan

COMMUNICATION PLAN

You are a mortgage broker at Thistown Brokers, Thistown.  You do not hold an Australian Financial Services (AFS) Licence.  A prospective client calls into the office to discuss his financial requirements.  Adam Brody (the client) is interested in purchasing a house in Thistown Heights.  Adam recently sold his unit and will be living in the new property with his girlfriend Rachel and dog Penny Lane.  The property will be purchased in Adam’s name only.  He has $150,000 deposit towards the purchase and is seeking to borrow $400,000 to $450,000.

Adam works as a Sales Manager and earns $120,000 per annum.  His fortnightly pay is deposited direct to his transaction account.  Adam is seeking a flexible product that does not have a fixed interest rate.  Under the FSRA a loan is not classified as a financial product. 

After clarifying Adam’s situation and eligibility you have decided to recommend a standard variable loan with FEDBANK.  You outline the features and benefits of the product to him, including the redraw facility.  After considering these, Adam advises that he often has surplus funds in his transaction account, however would prefer not to deposit these to the loan account in case he needs the funds for other purposes.  He often has a balance of $10,000 or more in the account.  You consider that an offset instead of a savings account (classified as a financial product under FSRA) option would suit his needs.  

1. From the above scenario outline in point form Adam’s objectives and goals with regard to his product requirements.

• Adam wants to invest and wait for capital growth of the house
• He seeks a flexible product that does not have fixed interest rate.
• He wants a redraw facility instead of a savings facility.

1. Adam has requested information about the offset option.  Under the FSRA how will you respond to this request.

• His financial situation must be verified.
• Advice him if the credit he is seeking is suitable for him.

1. Adam has asked you to explain the redraw facility.  Are you allowed to provide the information?  Why or why not?

Yes, I am allowed to provide the information.Because this facility comes with additional fees for deposits and withdrawals.

1. Research and list two key benefits of Home and Contents insurance. If Adam requests this information are you allowed to outline these key benefits to him?

Yes, if he requests this information you are allowed to provide this information which is; it saves for you in thefollowing ways get up to 30% no claim bonus discount and reduce your premium by varying your excess.

1. Although Adam’s job is fairly secure, he does worry about uncertainty in the financial markets and the economy and has sought some information about mortgage protection insurance.  What do you tell him?

In case he defaults on the mortgage , he is protected and also covers the cost of monthly mortgage repayments incase of death , job loss or when he is seriously ill.

1. The qualified specialist (Tier 2) is not in the office to complete the paperwork for Adam’s Home and Content insurance. Advise two methods the specialist can use to contact Adam to gather his personal and financial details for the paperwork.

• Australian Financial security Authority
• Australian Security and Investment Commission(Eliot, 2016).

In order to complete this question you will need to visit the website for Credit Ombudsman Services Limited (“COSL”).

Steven Shields calls Hopetown Brokers and speaks to John Grey (Complaints contact person).  Steven has received a letter from Fedbank over a loan application lodged in his name via broker Pauline Peters.  He advises John that he has never visited or met with Pauline, nor has he lodged a loan application with Hopetown Brokers. Steven, however, feels that John did not deal with his complaint adequately.

Hopetown Brokers is a COSL member. Steven has tried to resolve the matter with Hopetown Brokers, but is still dissatisfied to the point where he is seeking disciplinary action be taken against Pauline.

Using the COSL Rules (www.cosl.com.au), ascertain if COSL would handle Steven’s complaint and the reason(s) why or why not.

Using the COSL Rules, COSL would be able to handle Stevens complaints as they loan were done by a broker. Hopetown brokers filed and lodged a loan for him. When he talked to John Grey, the complaints contact person, he lodges the complaint. This is because Steven received a letter from Fedbank over a loan application that was lodged in his name via a broker known a Pauline. He has never met or visited the broker. COSL, should crack the whip on rogue brokers who are acting on principals without consultation. COSL will first launch investigations on the application that was  lodged and if Stevens was consulted, if not then COSL should use its rules to handle Stevens complaints as a regulator. It should also punish the Pauline Peters.

References

Acharya, V. (2011). Guaranteed to fail. Princeton: Princeton University Press.

Eliot, G. (2016). The mill on the Floss. New York: Open Road Integrated Media.

Retsinas, N. and Belsky, E. (2011). Moving forward. Cambridge, Mass.: Joint Center for Housing Studies, Harvard University.

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