1.TRIPLE BOTTOM LINE REPORTING

The Department of Sustainability, Environment, Water, Population and Communities commissioned a report called "Triple Bottom Line Measurement and Reporting in Australia: Making it Tangible". Use a search engine to access a copy of this report.

After reading the report please list and describe (in your own words) each of the five broad categories that capture the current diverse state of play in performance measurement and reporting in Australia.

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2.SUSTAINABLE BANKING

Sustainability is not confined to our larger financial institutions like CBA, NAB and IAG.It is also being embraced by smaller institutions such as Maleny Credit Union (MCU) Sustainable Banking. MCU began operations in 1984 as a community based credit union located in Maleny, Queensland.

The MCU Board of Directors is committed to long-term sustainability and believes the credit union has social and environmental obligations in addition to providing sound financial management. MCU practices "triple bottom line" reporting as a way of measuring progress and ensuring accountability against its sustainability targets.

Review the MCU website and detail below how MCU practices socially responsible investment.

3.CODES OF PRACTICE

a.What are industry and professional codes of conduct? Explain their purpose.

b.List the nine major codes of practice that impact on the financial services industry including those that affect Finance/Mortgage Brokers.

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4.GENERAL CONDUCT OBLIGATIONS

Research RG205 Credit licensing: General conduct obligations. In your own words describe the General Conduct Obligations.

i.Obligation

ii.Description

iii.Your broad compliance obligations

Your internal systems

Your people

Your resources

5.SOURCING INFORMATION

This activity allows you to demonstrate your competency at researching specific information. Answer the following questions:

a.Since the introduction of the Goods and Services Tax (GST) what mandatory requirements are in place for businesses within Australia? Your answer will need to cover requirements other than just reporting. Accessing the 'Business' tab on the ATO website will assist you.

i.The need for registration requirements

ii.The categories (Cash/Accruals)

iii.Reporting time frames and the name of the report

iv.Collection and remittance of GST?

b.List three websites that could be useful in providing an indication of legislative and regulatory practice within the financial services industry.

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c.In your own words, give a definition of Money Laundering and how Terrorism Financing differs from it:

Money Laundering is:

iv.Terrorism financing differes from money laundering in the following ways:

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Task 3 - Case Study questions (1-4)

1.RESPONSIBLE LENDING SCENARIOS

Scenario 1:Mustapha has just been told that come 1^st July he would be stepping up as the new Assistant Manager. On telling his partner Jenny the good news, she suggested they start looking to buy a house as they'd probably be able to afford one. Excited, they call a local finance broker who was previously referred to them by a friend.

The finance broker congratulated Mustapha on his imminent promotion and asked if they would answer some questions to help determine how much they could borrow. Mustapha and Jenny agreed to provide the required financial information. Mustapha and Jenny are good savers and have sufficient funds to possibly cover for a 10 per cent deposit.

Jenny is cautious and felt a fixed rate loan would be better so they could budget effectively. Mustapha felt no reason to disagree so the broker worked out a loan amount based on the introductory rate which was fixed for the first six months. Mustapha's increased salary meant they could borrow a lot more than before. Jenny's income varied as she works casual at the local store. The broker asked Jenny how many hours she worked on average to determine their combined income.

The broker signed and dated the preliminary assessment with today's date. She then gave Mustapha & Jenny a copy.

a.Explain the importance of making initial enquiries about a customer and verifying this information.

b.Module 1, Section 2 of the learning guide covers responsible lending conduct obligations in detail. Considering what a broker should cover in terms of responsible lending, list at least five (5) things that the finance broker failed to provide/discuss in Scenario 1 interview.

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Scenario 2: Mal and Corinne are seeking your advice in relation to refinancing their loan after speaking with some friends who have a more flexible loan product and a better rate with their lender.

c.Highlight the factors Mal and Corinne should consider before making the decision to switch or refinance their loan.

2.CONSUMER PROTECTION

Scenario: Stephen was a floor and wall tiler who earned $1,200 a week. He spent $600 a week on expenses. He went to a lender to get a home loan of $200,000. Stephen needed a loan with an average interest rate that he could pay off over the medium term.

Instead, he was offered a loan for $500,000 with a high fixed interest rate and therefore repayments that he could not readily afford. As he was experiencing hardship, Stephen sought an injunction against the lender collecting his mortgage repayments. Stephen then sought compensation for the loss and damage he had suffered for being put into an unsuitable loan.

a.Describe what you think will happen under the consumer protection provisions of the responsible lending obligations.

b.What penalties can be incurred? (Refer Learning Guide Module 1, Section 2)

3.DISCLOSURE AND PRESCRIBED DOCUMENTS

(Please note this relates to Finance/Mortgage Broking under the NCCP Act 2009 and not Financial Planning)

a.What document should a credit representative or Australian Credit Licence holder provide to a client to explain about the services they offer? List some of the information contained in this document.

b.In your own words, explain why is it important for a business to have a sufficient complaints handling system? In your answer explain the essential steps in handling and resolving a customer complaint. The Commonwealth Ombudsman has a good Better Practice Guide to Complaint Handling publication on their website.

Scenario: John Consumer is applying for a loan of $350,000 to buy a home. The Credit Representative's fee quoted to John to recommend and apply for a loan on his behalf is $225.00 (in most cases non-refundable). The valuation fee is estimated at $350.00, $800.00 for legal fees and a loan application fee of $400.00, and are payable to the lender. The Credit Representative's Licensee receives from the lender an up-front commission of 0.40% + GST of the loan amount and a monthly trail commission of .15% + GST on the outstanding loan balance. An agreement will be in place between the Licence holder (Principal) and the Credit Representative (Contractor/Employee) to proportionately share the commissions.

c.Complete the blanks in the following fees and commissions table detailing the amounts that would need to be provided to John in the credit proposal disclosure. You may also need to remove those options that are not applicable to this scenario.

Fees and commissions

Credit representative fees payable to us for the provision of broking service

[DELETE those options which are not appropriate]

We do not charge any fees for our service.

We get paid commission from the lender.

Our service fee is $ (including GST) or

% of the finance amount, for arranging finance on your behalf.

The fee is payable on approval of your loan/s. [You cannot charge a fee before you provide credit assistance]

Fees payable to third parties

[DELETE those options which are not appropriate]

There are no fees or charges paid by us to third parties.

Total fees and charges paid by us to third parties are $ (including GST).

The fees and charges are paid to for arranging . [for example 'paid to XYZ Company for arranging valuation']

The fee is payable when required by the third party.

Estimate of commission to be received by us. This commission is payable to us for assisting you to obtain finance.

% of the principal finance amount (plus GST) shortly after the finance is provided.We estimate this one-off payment to be $

% per annum of your outstanding loan amount owing payable monthly (plus GST).We estimate the monthly payment to be $

Commission will be paid by

The commission will be paid by the lender documented above to the licensee. The licensee will then pay some or all of the commission to the credit representative.

Other benefits

From time to time we receive benefits in the form of conferences and training sessions provided by the licensee, financiers, or others.The value of these benefits cannot be ascertained.

Estimate of total fees and charges payable to the financier in relation to applying for the finance.

These fees are payable by you.

Loan application/Establishment fees

Valuation fees

Legal/Documentation/Settlement fees

Lenders mortgage insurance premium

Other

Total

These figures are estimates only and the final figures will be shown in your credit contract or lease.Some or all of these fees may be paid from the finance proceeds.

These fees are payable only once.

We are not aware of any other fees or charges payable to anyone else in relation to the application for finance, but the financier may impose some additional requirements.

[IF ANY FEES ARE DEFINITELY TO BE PAID FROM THE CREDIT OBTAINED, SPECIFY A REASONABLE ESTIMATE OF THE AMOUNT OF CREDIT LEFT AFTER PAYING THOSE AMOUNTS AND ANY FEES TO THE BROKER.]

Referral fee

The credit representative has paid or will pay a referral fee of $ to for referring you to us.

In addition, we receive referrals from a broad range of sources.For example, we may pay fees to call centre companies, real estate agents, accountants, or lawyers for referring you to us.These referral fees are generally small amounts and accord with usual business practice. These are not fees payable by you.

4.TEAM WORK AND ORGANISATIONAL PLANNING

Scenario: You have recently been employed as a Mortgage Broker in a medium-sized Mortgage Broking practice. You are in charge of a small team of inexperienced mortgage brokers and Administration support staff. You discover that morale in the firm is low because:

People are unable to distinguish between tasks that require them to work autonomously from those that require them to work as part of a team.

There is a lack of communication about team activities.

Due to the relative inexperience of the team, the image of the firm internally and externally is not very good.

People do not seem to know how to prioritise their work or to manage their time and resources effectively.

Although the firm has good technology it is not being used effectively for collaborative purposes.

Given the above, answer the following:

a.What would you do to promote teamwork and actively encourage team members to participate in and take responsibility for team activities and communication processes?

b.Give at least four examples of steps you could take to ensure that time and resources are better managed.

c.What are the things you would do to ensure that your own contribution serves as a role model for others and improves the organisation's image?

d.How would you use technology to help facilitate better collaboration among staff?

e.How would you plan tasks so that members can distinguish those that require them to work independently from those that require team effort?