Section 1 Task 1: Question 2 Assess Ray and Steves special financial needs by developing in the following table a matrix of key product features that would address those needs: (200 words) Student response
Written Assignment
Complex Lending and Broking(DFMB2_AS_v3A2)
Student identification (student to complete)
Please complete the fields shaded grey.
Student number Written Assignment result (assessor to complete)
Result first submission Not yet demonstrated
Parts that must be resubmitted
Result resubmission (if applicable) Not applicable
Result summary (assessor to complete)
First submission Resubmission (if required)
Section 1Not yet demonstrated
Not applicable
Section 2Not yet demonstrated
Not applicable
Section 3Not yet demonstrated
Not applicable
Section 4Not yet demonstrated
Not applicable
Section 5Not yet demonstrated
Not applicable
Feedback (assessor to complete)
[insert assessor feedback]
Before you begin
Read everything in this document before you start your written assignment for the Complex Lending andBroking (DFMB2) subject.
About this document
This document is the written assignment and includes the following:
Instructions for completing and submitting this written assignment
Section 1: Case study 1 Ray Murdoch and Steve Brown Commercial Equipment Finance
Task 1 Identify the clients complex broking needs
Task 2 Develop complex broking options
Task 3 Implement complex loan structures
Task 4 Detailing analysis findings
Section 2: Case study 2 Bill Smith and John Jones Commercial Premises Finance
Task 1 Identify the clients complex broking needs
Task 2 Prepare complex broking options
Task 3 Implement complex loan structures
Task 4 Detailing analysis findings
Section 3: Case study 3 Rahn and Deepa Singh Property Development Finance
Task 1 Identify the clients complex broking needs
Task 2 Prepare complex broking options
Task 3 Implement complex loan structures
Task 4 Detailing analysis findings
Section 4: Complex lending and broking Identifying, developing, presenting and implementing complex broking options
Task 1 Complex collateral (specialised security)
Task 2 Complex loan structures
Task 3 Legislation and codes of practice
Section 5: Ethical Decision-making Frameworks and Principals
Task 1 Frame the ethical question applicable to the situation
Task 2 Determine ethical response to the situation
Task 3 Develop implementation plan and carry out ethical response to the situation
Task 4 Evaluate the outcomes of the ethical response
Task 5 Dealing with workplace ethics
How to use the study plan
We recommend that you use the study plan for this subject to help you manage your time to complete the writtenassignment within your enrolment period. Your study plan is in the KapLearn Complex Lending andBroking (DFMB2v3) subject room.
Instructions for completing and submitting this written assignment
Saving your work
Download this document to your desktop, type your answers in the spaces provided and save your work regularly.
Use the template provided, as other formats will not be accepted for this written assignment.
Name your file as follows: Studentnumber_SubjectCode_Assignment_versionnumber_Submissionnumber (e.g. 12345678_DFMB2_AS_v3A2_Submission1).
Include your student ID on the first page of the written assignment.
Before you submit your work, please do a spell check and proofread your work to ensure that everything isclear and unambiguous.
The written assignment
The information and data you require to complete this written assignment is presented in the case studies which are located in the subject room.
This written assignment covers complex lending and broking and requires you to answer the questions for all five (5) sections. Each of the three (3) case studies focus on a different lending scenario and must be completed.
Word count
The word count shown in each question is indicative only. You will not be penalised for exceeding the suggested word count. Please do not include additional information which is outside the scope of the question.
Additional research and referencing
When completing this assignment, assumptions are permitted although they must not conflict with the information provided in the case studies. All assumptions must be noted.
You may also be required to source additional information from other organisations in the finance industry to find the right products or services to meet your clients requirements, to source indicative interest rates and to calculate any fees and charges that may be applicable.
You will be required to do additional research to answer the written assignment questions. However,youranswers must still be written in your own words.
This means if you are using external sources, you should aim to read and understand the source, then write it in your own words. This is called paraphrasing.
If the words of the source are special or unique, and you want to use them, you can do so occasionally. Inthis case, you should place the text in quotation marks. This is known as a quotation.
If you paraphrase or quote external sources, you must reference the source using an in-text citation (inanystyle, reference list not required). Some examples are below:
The ATO is the principal agency responsible for collecting revenue for the Australian government (ATO2023, About ATO, www.ato.gov.au/about-ato).
Credit licensees must ensure their representatives meet the requirements set out in RegulatoryGuide206 Credit Licensing: Competence and Training (ASIC 2020, https://asic.gov.au/regulatory-resources/credit/credit-general-conduct-obligations/rg-206-credit-licensing-competence-and-training).
According to ASIC, a person can be a credit licensee and a representative but only where they are for different authorised credit activities (ASIC 2023, https://asic.gov.au/for-finance-professionals/credit-licensees/credit-representatives).
This way your assessor knows what are your words and ideas, and what are those of other people orsources. This is critical for your assessor to be able to accurately assess your competence.
Submitting the written assignment
Only Microsoft Office-compatible written assignments submitted in the Word template file will be accepted for marking by Kaplan Professional Education. You need to saveand submit this entire document.
Incompletewrittenassignments will be returned to you unmarked.
Do not remove any sections of the document.
Do not save your completed written assignment as a PDF.
The maximum file size for the written assignment (Word document) is 20MB. Once you submit your writtenassignment for marking, you will be unable tomake any further changes to it.
You are able to submit your written assignment earlier than the deadline if you are confident you have completed all parts and have prepared a quality submission.
Refer to the Important details available in the Written assignment section of KapLearn under your Written assignment Enrolment.
Note: Your written assignment must be submitted on or before your personal due date. Pleasecheck KapLearn for your due date.
The written assignment marking process
You have 12 weeks from the date of your activation in this subject to submit your completedassignment.
If you reach the end of your initial enrolment period and have been deemed Not yet competent in one or more assessment items, then an additional four (4) weeks will be granted, provided you attempted all assessment tasks during the initial enrolment period.
Your assessor will mark your written assignment and return it to you in the Complex Lending and Broking (DFMB2_v2) subject room inKapLearn under the Assessment tab.
Make a reasonable attempt
You must demonstrate that you have made a reasonable attempt to answer all of the questions in yourwritten assignment. Failure to do so will mean that your assignment will not be accepted for marking; therefore,you will not receive the benefit of feedback on your submission.
If you do not meet these requirements, you will be notified. You will then have until your submission deadline to submit your completed written assignment.
How your written assignment is graded
Assignment tasks are used to determine your competence in demonstrating the required knowledge and/or skills for each subject. As a result, you will be graded as either competent or not yet competent.
Your assessor will follow the below process when marking your written assignment:
Assess your responses to each question, and sub-parts if applicable, and then determine whether you have demonstrated competence in each question.
Determine if, on a holistic basis, your responses to the questions have demonstrated overall competence.
You must be deemed competent in all assessment items in order to be awarded your qualification, including demonstrating competency in:
all of the exam questions
the written assignment
the oral assignment.
Not yet demonstrated and resubmissions
Should sections of your assignment be marked as Not yet demonstrated, you will be given an additional opportunity to amend your responses so that you can demonstrate your competency to the requiredlevel.
You must address the assessors feedback in your amended responses. You only need to amend those sections where the assessor has determined you are Not yet demonstrated.
Make changes to your original submission. Use a different text colour for any written sections of your resubmission. Yourassessor will be in a better position to gauge the quality and nature of your changes. Ensure you leave your first assessors comments in your assignment, so your second assessor can see the instructions that were originally provided for you. Do not change any comments made by a Kaplanassessor.
Units of competency
This written assignment is your opportunity to demonstrate your competency against these units:
Unit code Unit name
FNSFMB512 Identify and develop credit options for clients with special financial circumstances
FNSFMB513 Present credit options to clients with special financial circumstances
FNSFMB514 Implement complex loan structuresFNSINC514 Apply ethical frameworks and principles to make and act upon decisions
Note that the written assignment is one of three assessments necessary to meet the requirements of the units of competency.
We are here to help
If you have any questions about this written assignment, you can post your query at the Ask your Tutor forum in your subject room. You can expect an answer within 24 hours of your posting from one of our technical advisers or Course Coordinator.
Note: Some commercial lenders will not provide interest rate quotes on some commercial products. Oftencommercial lenders add a risk-weighted margin to a base lending rate for certain commercial products. Without conducting an analysis and risk score, they tend to be reluctant to provide quoted interest rates over the phone. Forthe purposes of the case studies, conduct online research to ascertain approximate interest rates, loan terms available, and fees and charges that usually align to the types of products that would be required to execute the clients transaction. You are allowed to use estimates.
The case studies are located in the subject room.
Section 1: Case study 1 Ray Murdoch and Steve Brown Commercial Equipment Finance
Section 1 Task 1: Identify the clients complex broking needs
Business risk can be defined as anything that may impact the financial health of a business, or that could lead to insolvency.
The risk to a business can eventuate for a variety of reasons and can come from internal or external sources. It is your responsibility (as the broker) to understand the clients business, potential risks, theirhistory, experience and business performance. You will also need to understand specific aspects of the transaction such as your clients intended goals, objectives and requirements in purchasing the equipment.
Note: Responses for Tasks 14 include the scenario outlined in Case study 1. Additional references in topic notes under sections 14 and 15 and the Toolbox. The Glossary may also be helpful.
Assumptions are acceptable where no direct information is provided or available following research.
Section 1 Task 1: Question 1
Prepare a list of questions that you would ask Ray and Steve to gather information in the preparation oftheloan application.
Your questions for Ray and Steve should uncover:
their understanding of the risks and complex nature of purchasing this equipment (e.g. the risk that the investment may not meet the returns they are expecting)
their understanding of the potential risks and benefits/returns associated with financing the equipmentpurchase
the director's tolerance of risk in relation to the purchase and potential damage to the asset being acquired during delivery, installation or operations. How would they mitigate these risks?
if they have any specific finance product and/or features they require (i.e. leasing, chattel mortgage orother)
if they want flexibility in the finance facility to be able to pay it out early or be able to refinance at the end of the contract term, and what options are available at the end of financing term
if they would consider using their own residential properties as security to provide different lending options
their understanding of their obligation for insurance and maintenance of the equipment etc.
their understanding of the financial aspects of the transaction (e.g. total costs, installation, other potential premises modifications required to accommodate the machine etc.)
information on the purchasers current financial position related to the business
if they have a taxation strategy in regards to the purchase of the equipment
which other professionals they will consult with and for what purpose
their understanding and/or whether they can mitigate any other potential risks you have identified with their situation (e.g. their experience, background, succession planning and business ownership issues).
(500 words)
Student response to Section 1 Task 1: Question 1
Answer here
Assessor feedback for Section 1 Task 1: Question 1
Assessor feedback Resubmission required?
No
Section 1 Task 1: Question 2
Assess Ray and Steves special financial needs by developing in the following table a matrix of key product features that would address those needs:
(200 words)
Student response to Section 1 Task 1: Question 2
Product name Key product features Client financial needs
Chattel mortgage Answer here Answer here
Lease agreement Answer here Answer here
Commercial hire purchase Answer here Answer here
Assessor feedback for Section 1 Task 1: Question 2
Assessor feedback Resubmission required?
No
Section 1 Task 1: Question 3
Consider the client background information you have been provided in the case study and present a brief explanation of the most relevant key product features that appear to meet Ray and Steves financial needs, including tax benefits related to the product. Highlight any risks that these product features may present. Explain your limitations when providing advice.
(350 words)
Student response to Section 1 Task 1: Question 3
Answer here
Assessor feedback for Section 1 Task 1: Question 3
Assessor feedback Resubmission required?
No
Section 1 Task 2: Develop complex broking options
You are required to prepare a full loan proposal addressed to Ray and Steve outlining available loan options and theapplication process. The proposal should also describe the potential advantages and disadvantages of the financing option that is being recommended.
This task will require research on lenders via the internet. Where no product particulars are available, assumptions are acceptable. Additional information is available in the Toolbox under Pallets-R-Us Pty Ltd and Helpful links.
Disclaimer: This question requires you to demonstrate a good understanding of product knowledge, riskandgeneral lender requirements for developing a loan proposal. It is possible to research these issues and obtain a checklist of supporting documentation for each loan type from a range of web-based resources published by the major lenders and aggregators.
In a suitable report format or using the template Loan proposal to client in the Toolbox, prepare a proposal and address the following:
1.The borrowing parties to the loan what names will be on the loan contract?
2.Provide two (2) different asset/equipment finance product options that would meet the borrower'sobjectives. (Refer to Task 1, Question 2.)
3. After considering all the client's objectives, as outlined in the case study, provide your recommendation of the best product option to best meet their needs. Which product type would you recommend and why? Explain why the alternate product proposed (in point 2) may not be themost suitable option based on all the objectives outlined in the case study.
4.Identify three (3) lenders that offer the financing product you are recommending. Advise the product type and lender product name, compare each lender's benefits, services, and features as outlined ontheir website and identify the differences between products for the client.
5.Provide a summary of the transaction, borrowing amount, term, monthly repayment, andresidual/balloon amount based on the clients requirements. An interest rate of 7% per annum isto be used. (Refer to the Toolbox for the calculator link.)
6.Advise the client of relevant broker fees, both percentage and amount and other remunerations you may receive from the lender.
7.Outline all security that will be required, including directors guarantees.
8.List the documentation they need to provide to the lender for this transaction.
9.Outline the clients responsibilities so they fully understand their obligations regarding the security offered and the equipment during the loan term.
10.Provide details of the financial and transaction risks associated with the new loan of which they should be made aware. For example, what would happen if they could no longer service the debt?
11.They enquired about claiming back the GST that is included in the purchase price of the machine.In accordance with your qualifications as a finance broker, what should you advise them to do regarding their question on claiming back GST?
12.Invite them to ask you any questions they may have about the transaction.
13.Provide an instruction for them to advise you to proceed with the application on their behalf.
(800 words)
Notes: Any assumptions you make should be listed, and not conflict with the case study information already provided.
You are to write a loan proposal to your clients, demonstrating your professional writing skillsnot simply commenting on each of the points detailed above.
Your proposal should be supported by evidence-based statements and not contain opinion-based commentary.
The use of tables in the report to set out some of the numeric information may be of benefit.
Student response to Section 1 Task 2
Answer here
Assessor feedback for Section 1 Task 2
Assessor feedback Resubmission required?
No
Section 1 Task 3: Implement complex loan structures
Your client has accepted your product recommendations and has authorised you to submit an application to the recommended lender.
As part of implementing their loan application, you are required to prepare a formal written loan submission to the lender called a credit memorandum for approval. Where a part of the application does not apply to your client, answer with a not applicable (N/A).
Note:Lenders have different credit policies and submission requirements, which vary from lender to lender. Refer to the Toolbox under Pallets-R-Us Pty Ltd for additional information.
Your loan submission must include:
1.the details of borrower, guarantors, including all contact details
2.the borrowers and key personnels backgrounds
3.an overview of the proposal what the finance is for how it benefits the business
4.a funds to complete table (cost, deposit etc.) including statutory costs and any relevant fees
5.the proposed structure of the facility being recommended product type, loan amount, term, interest rate, repayments, residual value (if any), pricing (lender fees etc.)
6.cash flow/serviceability calculations using net profit after tax (NPAT) averaged over two years. Include the current company loan repayments along with the annual interest on the company overdraft calculated at 80% of the limit
7.full details of the security/collateral that is to be provided and whether clients should seek independent legal advice
8.any relevant conditions of approval that the client must meet (if applicable)
9.a description of the relevant risks industry, business, transactional, financial and how they will be mitigated
10.a list of all documents that would be attached to the application
11.any other information that is relevant to assist the lender to provide an approval
12.your comments and recommendations.
(800 words)
Notes: Any assumptions you make should be noted, and not conflict with the case study information already provided.
You are to write a formal submission to the lender, not simply commenting on each of the points detailed above.
Using tables in the report to set out some of the numeric information may be of benefit.
Student response to Section 1 Task 3
Answer here
Credit Memorandum
Borrower details:
Name Answer here
ACN/ABN Answer here
Directors name / address Answer here
Shareholders name / address / percentage of shareholding Answer here
Principal place of business Answer here
Postcode Answer here
Phone number Answer here Fax number Answer here
Year established Answer here Industry (if applicable) Answer here
Nature of business activities Answer here Trust
Full name of trust Answer here
Type of trustee Company Y / N Answer hereIndividual Y / N Answer here
Name of trustee Answer here
Year established Answer here
Type of trust Answer here
Beneficiaries Answer here
Background of borrowers/industry:
Answer here
Purpose of loan/loan structure/loan details:
Answer here
Funds to complete table
Purchase price Answer here
Lenders fees and charges Answer here
Statutory costs Answer here
Sundry costs Answer here
Broker fees /Solicitors fees Answer here
Total cost Answer here
Less Deposit paid Answer here
Less Contribution by the borrower Answer here
Less Loan amount Answer here
Total funds required Answer here
Debt servicing
Answer here
Security details/Exit strategy
Answer here
Conditions precedent
Answer here
Business/industry/transaction risk
Answer here
Attachments to accompany the submission
Answer here
Supporting information and recommendation
Answer here
Name:
Organisation:
Date:
Assessor feedback for Section 1 Task 3
Assessor feedback Resubmission required?
No
Section 1 Task 4: Detailing analysis findings
This task requires you to describe the actions you would take to verify the applicants details and financialsituation.
You will need to identify the key verification tasks associated with the financial situation of both individual applicants and related business activities, based on the information set out in the case study.
Note: To complete this task you will need to refer to the Toolbox in the sections Pallets-R-Us Pty Ltd and Lending organisations guidelines, policies and procedures, legislative requirements, loan verification and loan standards. You may also need to conduct your own independent research to answer these questions.(500 words total, across questions 16)
Section 1 Task 4: Question 1
(a)Identify and list each of the individuals and/or business entities for which you would require a creditreport.
(b)Name the company that you would use to access this information and explain what you require from the client in order to gain consent to obtain this information.
(c)Part (b) requires you to obtain appropriate consent to conduct the credit check. What legislation are you complying with by obtaining consent prior to proceeding?
(d)List the information that is provided in the credit report (provide six (6) items).
Student response to Section 1 Task 4: Question 1
Answer here
Assessor feedback for Section 1 Task 4: Question 1
Assessor feedback Resubmission required?
No
Section 1 Task 4: Question 2
(a)What documents do you need to obtain to identify the individuals that are party to this loan?
(b)Name the legislation that covers this requirement.
Student response to Section 1 Task 4: Question 2
Answer here
Assessor feedback for Section 1 Task 4: Question 2
Assessor feedback Resubmission required?
No
Section 1 Task 4: Question 3
What sources or supporting documentation would you need to obtain to verify the financial information disclosed by the client?
Student response to Section 1 Task 4 Question 3
Answer here
Assessor feedback for Section 1 Task 4: Question 3
Assessor feedback Resubmission required?
No
After reviewing the background information and the applicants business details, complete the followingquestions.
Section 1 Task 4: Question 4
Provide a summary of the impact the new loan repayments will have on the companys financial position after debt servicing. Assume a projected increase of 50% in net profit after tax (NPAT) based on the Year20X1 trading results.
Student response to Section 1 Task 4: Question 4
Answer here
Assessor feedback for Section 1 Task 4: Question 4
Assessor feedback Resubmission required?
No
Section 1 Task 4: Question 5
Based on the background information provided in the case study and assuming an interest rate of 7% p.a., abrokerage fee of 1.1%, a residual value of 30% and a term of 5 years, calculate:
the borrowed amount
the brokerage fee
monthly repayments
total of annual repayments
residual amount
total of repayments over the term of the loan including residual payment.
Identify the calculator you have used and show your calculations.
Student response to Section 1 Task 4: Question 5
Answer here
Total amount borrowed Answer here
Monthly repayments Answer here
Total annual amount of repayments Answer here
Residual amount Answer here
Total of repayments over the loan term (include the residual payment) Answer here
Brokerage fee Answer here
Assessor feedback for Section 1 Task 4: Question 5
Assessor feedback Resubmission required?
No
Section 1 Task 4: Question 6
(a)Refer to Task 2 and list the two (2) security instruments to be obtained to secure this transaction.
(b)Explain the impact for the directors and the company if the lender calls on each of the securitiesprovided.
Student response to Section 1 Task 4: Question 6
Answer here
Assessor feedback for Section 1 Task 4: Question 6(a)
Assessor feedback Resubmission required?
No
Assessor feedback for Section 1 Task 4: Question 6(b)
Assessor feedback Resubmission required?
No
HYPERLINK l "REsultSummary"Assessor feedback for Section 1
[insert feedback]
Date assessed: Click here to enter a dateDoes the student need to resubmit? No
Questions that need to be resubmitted First submission Not yet demonstrated
Resubmission Not applicable
To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Section 2: Case study 2 Bill Smith and John Jones, Commercial Premises Finance
(The case study is located in the subject room)
Section 2 Task 1: Identify the clients complex broking needs
It is the brokers responsibility to understand the clients business, potential risks, their history, experienceand business performance. You will also need to understand specific aspects of the transaction such as the clients intended goals, objectives and requirements in purchasing the property.
Note: Responses for Tasks 14 include the scenario outlined in Case study 2. You will also find information for True Blue Pty Ltd in the Toolbox. The Glossary may also be helpful for this task. Assumptions are acceptable where no direct information is provided.
Prepare a list of questions you would ask Bill and John in order to gather information for the preparation ofthe loan application for their commercial property purchase.
Your questions to Bill and John should uncover the following areas:
the reasons behind the complex trust structure they have chosen particularly with the shareholder involvement and their willingness to be involved in the transaction with the lender
the benefits and risks with this property purchase
their risk tolerance with different product types (e.g. fixed rates/interest only, term of loan etc.)
the financial impact this purchase will have on the business and cash flow
anticipated costs to fit out the new premises to suit their business needs
the business structure/key personnel risks
the business and industry risks (e.g. required licensing and professional indemnity).
(200 words)
Student response to Section 2 Task 1
Answer here
Assessor feedback for Section 2 Task 1
Assessor feedback Resubmission required?
No
Section 2 Task 2: Prepare complex broking options
You are required to prepare a full report for Bill and John by outlining the application process and the risks (potentialand real) of which they should be aware. This must be presented in a suitable format that would be sent to the client, and includes preparing tables where relevant.
You will be required to outline to the directors the product options available to them and the process that will need to take place for them to complete the new property purchase and establish the loan.
When researching the product options, you will need to understand the clients situation and what funds will be available between the purchase and the sale settlement as outlined in the case study.
Note: The Toolbox provides additional information for this task. The two (2) product options for the property purchase are as follows:
Option 1: A bridging loan with a term loan following the bridging period (post sale settlement of current property)
Option 2: A variable rate term loan (to effect the purchase in 90 days time).
In developing your report, you should cover the following:
1.Who the parties to the loan are, given the Trust involvement.
2.Provide Bill and John with two (2) complex loan product options:
Option 1: Bridging loan with a term loan to follow the bridging period
Option 2: Variable rate term loan.
3.Your recommendation for the best loan structure option, including:
the loan amount
security/collateral including personal and company guarantees
the loan term
an explanation as to why the other option is not as suitable for the clients (include pros and cons and differences in fees and interest etc.)
4.Name three (3) lenders that offer the recommended product option required to facilitate this transaction. Advise the client of the product type, loan term, interest rate, ongoing fees and monthly repayment for each of the lenders.
5.The procedure to implement the loan, including the documentation Bill and John are required to provide and the security they need to provide.
6.Outline the risks of which Bill and John should be made aware. Information should cover risks associated with the selected loan products and required security, including guarantees and forms of security required in addition to property.
7.Provide the name of the borrower who will be on the loan contract, and the name that will go on the Certificate of Title (given the Trust involvement) when it is registered with the Land Titles Office. (Thisvaries from state to state so advise which state you are from refer to the Toolbox for assistance to conduct your research.)
8.Prepare a full funding description, including a summary of fees and charges for the purchase of the property, andthe set-up costs (e.g. solicitors fees) and lenders fees and charges. If there is a shortfall of funds, howwill this shortfall be covered?
9.The clients enquired about claiming back the GST that is included in the purchase price after settlement. In accordance with your qualification as a mortgage broker, what do you advise the clients to do regarding this question?
10.You request that the client informs you of any questions about the transaction and/or provide instructions for you to proceed.
11.Advise which relevant disclosures need to be made to the client regarding the broker remuneration.
(800 words)
Notes: Any assumptions you make should be listed, and not conflict with the case study information already provided.
You are to write a report to clients demonstrating your professional writing skills, not simply commenting on each of the points detailed above.
The use of tables in the report to set out some of the numeric information may be of benefit.
Student response to Section 2 Task 2
Answer here
Assessor feedback for Section 2 Task 2
Assessor feedback Resubmission required?
No
Section 2 Task 3: Implement complex loan structures
Bill and John have accepted your recommendations and have given you authority to proceed with theirapplication.
As part of implementing their loan application, you are required to prepare a formal written loan submission tolender for pre-approval.
Note:Lenders have different templates; therefore, credit policies and submission requirements will vary from lender to lender.
Using the information developed in Task 2, prepare a loan submission to include:
details of borrowers, guarantors and their contact details
what the business does, borrowers backgrounds including directors management ability
an overview of the proposal what the finance is for, the proposed structure and loan recommended, including:
product type
deposit amount (if required)
loan amount
term
interest rate
loan repayments.
a funds to complete table, including statutory costs and any relevant fees
completed debt servicing table and debt service cover ratio (DSCR) calculations (based on year 20X1 with no add backs) using information provided in the Topic 1-1 notes and the casestudy
full details of the security being offered
any proposed conditions relating to the loan (e.g. proof of sale of existing premises)
the relevant risks which may include industry, business, transactional, economic and personal, and how they can be mitigated
any other information that is relevant to assist the lender to provide an approval
a list of the documents that you would attach in your written submission
your comments and recommendations.
(800 words)
Notes: Any assumptions you make should be noted, and should not conflict with the case study information already provided.
You are to write a formal submission to the lender, or complete a Word document template and copy and paste it into the student response box.
Student response to Section 2 Task 3
Answer here
Credit Memorandum
Borrower details:
Name Answer here
ACN/ABN Answer here
Directors name / address Answer here
Shareholders name / address / percentage of shareholding Answer here
Principal place of business Answer here
Postcode Answer here
Phone number Answer here Fax number: Answer here
Years of operation Answer here Industry (if applicable) Answer here
Nature of business activities Answer here Trust
Full name of trust Answer here
Type of trustee Company Y / N Answer here Individual Y / N Answer here
Name of trustee Answer here
Year established Answer here
Type of trust Answer here
Beneficiaries Answer here
Background of borrowers/industry
Answer here
Purpose of loan/loan structure/loan details
Answer here
Funds to complete table
Answer here
Debt servicing table/DSCR
Answer here
Security details/Exit strategy
Answer here
Conditions precedent (If no conditions precedent, note with n.a.)
Answer here
Business/Industry/Transaction risk
Answer here
Attachments to accompany the submission
Answer here
Supporting information and recommendation
Answer here
Name:
Organisation:
Date:
Assessor feedback for Section 2 Task 3
Assessor feedback Resubmission required?
No
Section 2 Task 4: Detailing analysis findings
Commercial/business lending is less prescriptive than consumer lending; therefore, the information provided to the lender may seem quite thorough to the broker, yet once the lender receives the loan application, it is likely they will seek further information and clarification.
Note: To complete this task you will need to refer to the Toolbox and sections True Blue Pty Ltd trading as True Blue Real Estate and Lending organisations guidelines, policies and procedures, legislative requirements, loan verification and audit standards helpful weblinks are found in the Toolbox. You may also need to conduct your own independent research to answer these questions.
(500 words total, across questions 17)
Section 2 Task 4: Question 1
(a) Identify a minimum of four (4) areas where the lender may require additional information.
(b)What financial services professionals could you engage if you were not able to answer all of the lenders enquiries?
(c)If you needed to escalate any risks or concerns, who would you engage within your own organisation to assist?
Student response to Section 2 Task 4: Question 1
Answer here
Assessor feedback for Section 2 Task 4: Question 1
Assessor feedback Resubmission required?
No
Section 2 Task 4: Question 2
In Task 2, you obtained the clients agreement to proceed with the loan application. According to the regulations, legislation (i.e. Privacy Act 1988) and codes of practice, where should this information be recorded and stored?
Hint/Tip: In addition to the topic notes, you may find further information in the Toolbox.
Student response to Section 2 Task 4: Question 2
Answer here
Assessor feedback for Section 2 Task 4: Question 2
Assessor feedback Resubmission required?
No
Section 2 Task 4: Question 3
When identifying commercial borrowers and directors, legislative requirements concerning AML/CTF verifications must be met. What checks would you complete to meet these requirements? What are two(2) possible impacts if you did not complete these checks?
Student response to Section 2 Task 4 Question 3
Answer here
Assessor feedback for Section 2 Task 4: Question 3
Assessor feedback Resubmission required?
No
Section 2 Task 4: Question 4
In Task 1 you identified potential risks for Case study 2, Bill Smith and John Jones.
Choose three (3) risks associated with the new property purchase that you identified, and develop recommendations on risk management strategies that would help mitigate these risks.
Student response to Section 2 Task 4: Question 4
Answer here
Assessor feedback for Section 2 Task 4: Question 4
Assessor feedback Resubmission required?
No
Section 2 Task 4: Question 5
Based on your review of the borrowers financial position, compare their current and future outgoing commitments once the new loan is initially in place.
(a) What are the two (2) key impacts/changes to their cash flow?
(b) What is the change in the amount of their outgoing commitments? Demonstrate how you arrived atthis figure.
Please note: You are not expected to discuss any GST or taxation implications.
Student response to Section 2 Task 4: Question 5
Answer here
Assessor feedback for Section 2 Task 4: Question 5
Assessor feedback Resubmission required?
No
Section 2 Task 4: Question 6
(a) Refer to Task 3 and list at least two (2) security instruments to be used for this transaction.
(b) What would be the impacts for the individuals and/or companies if the lender was to call upon thesecurities?
Student response to Section 2 Task 4: Question 6
Answer here
Assessor feedback for Section 2 Task 4: Question 6
Assessor feedback Resubmission required?
No
Section 2 Task 4: Question 7
Provide two (2) examples of legal, financial or other issues that the client should be aware of when applying for credit in the name of a trust, for example additional documentation that may be required, taxation issues or fees.
Hint/Tip: Refer to the Toolbox for a helpful link to information about trusts.
Student response to Section 2 Task 4: Question 7
Answer here
Assessor feedback for Section 2 Task 4: Question 7
Assessor feedback Resubmission required?
No
Assessor feedback for Section 2[insert feedback]
Date assessed: Click here to enter a dateDoes the student need to resubmit? No
Questions that need to be resubmitted First submission Not yet demonstrated
Resubmission Not applicable
To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Section 3: Case study 3 Rahn and Deepa Singh Property Development Finance
The case study is located in the subject room.
Section 3 Task 1: Identify the clients complex broking needs
It is the brokers responsibility to understand the clients business, potential risks, their history, experienceand business performance. You will also need to understand specific aspects of the transaction such as their intended goals, objectives and requirements in purchasing the property.
Prepare a list of questions that you would ask Rahn and Deepa in order to gather information in the preparation of the loan application for their investment property development.
Your questions should uncover the following areas:
their future goals, employment history, experience in project management, financial position, attitude to risks and the property purchase
the complex features of the proposed construction financing transaction and options for 100% funding
the identification of potential risks involved with construction loans and Rahn and Deepas tolerance for risk
the financial aspects of the transaction, including progressive payments and cost overruns
the financial position of the borrowers and their capacity to meet project costs
experience in managing a construction project and whether they intend to use other building specialists or project managers
the customers intention to undertake another project after completion
the customers plans for management of the rental and sale of one unit
if the project exceeds the projected amounts, how they would manage the extra costs.
(800 words)
Student response to Section 3 Task 1
Answer here
Assessor feedback for Section 3 Task 1
Assessor feedback Resubmission required?
No
Section 3 Task 2: Prepare complex broking options
You are required to prepare a proposal for Rahn and Deepa outlining the loan approval process and the transaction risks they should be aware of.
Prepare the proposal document, in a suitable format, and explain the consumer loan options available toRahn and Deepa. Outline the process that will need to take place for them to complete the purchase ofthe property and construction of the three units.
Note: You will need to refer to the case study and Toolbox for supporting information.
In developing your report, you should cover the following:
1.Who the parties to the loans are.
2.Provide Rahn and Deepa with two initial loan products that would meet their requirements.
Option 1: A loan/s secured by the family home to provide the required funds to purchase land and complete the development. This involves cross-collateralisation of properties.
Option 2: A loan/s that will include a property development loan to assist with the purchase of land and construction without leveraging the family home.
3. Provide an explanation of why each of the loan structures is suitable for the client. Also, present your recommendation for the preferred loan structure and explain why you have recommended it.
4.Present Rahn and Deepa with three (3) lenders that provide the product required to facilitate this transaction and advise the client of the product type, loan term, interest rate, ongoing fees and monthly repayment for each of the products.
5.Describe the procedure, from proposal to unconditional loan approval, including documentation required from Rahn and Deepa. Ensure you mention the compliance documents you need to complete.
6.Describe the client responsibilities, so Rahn and Deepa understand the facilities being proposed.
7.Outline the risks (potential and real) of which Rahn and Deepa should be made aware of, including using their own home as security. Also provide suggestions to mitigate risks.
8.Prepare a full funding description including a summary of fees and charges for the initial purchase of the land through to completion of the project. Ensure you include the costs for set-up and those of the lender.
9.Prepare a timeline for the project, detailing payments and where funds will be obtained from.
10.A request for the client to inform you of any questions about the transaction and provide an instruction for you to proceed. (Prepare an authority statement with signature provisions.)
11.Advise which relevant disclosures need to be made regarding broker remuneration.
(800 words)
Notes: Any assumptions you make should be listed, and not conflict with the case study information already provided.
You are to write a report to the clients demonstrating your professional writing skill, not simply commenting on each of the points detailed above.
Student response to Section 3 Task 2
Answer here
Summary of proposal
(Introduce your organisation and briefly outline the proposal.) Answer here
Parties to the loan Answer here
Product description Answer here
Loan structure Option A
(Include an explanation of why this loan structure is suitable.) Answer here
Loan structure Option B
(Include an explanation of why this loan structure is suitable.) Answer here
Product recommendation Answer here
Propose lender (1) based on product recommendation Lender: Answer here
Loan product: Answer here
Value: Answer here
LVR: Answer here
Loan amount: Answer here
Loan term: Answer here
Interest rate: Answer here
Monthly repayment: Answer here
Establishment fees: Answer here
Ongoing fees: Answer here
Propose lender (2) based on product recommendation Lender: Answer here
Loan product: Answer here
Value: Answer here
LVR: Answer here
Loan amount: Answer here
Loan term: Answer here
Interest rate: Answer here
Monthly repayment: Answer here
Establishment fees: Answer here
Ongoing fees: Answer here
Propose lender (3) based on product recommendation Lender: Answer here
Loan product: Answer here
Value: Answer here
LVR: Answer here
Loan amount: Answer here
Loan term: Answer here
Interest rate: Answer here
Monthly repayment: Answer here
Establishment fees: Answer here
Ongoing fees: Answer here
Lender security requirements
(Include comments concerning ongoing obligations, i.e. insurance etc.) Answer here
Funding table
Purchase price of land Answer here
Stamp duty (state) Answer here
Solicitors fees Answer here
Sundry costs Answer here
TOTAL FUNDS NEEDED TO PURCHASE LAND Answer here
Lenders fees and charges Answer here
Demolition and site clearance costs Answer here
Subdivision costs Answer here
Building contract Answer here
Contingency costs Answer here
TOTAL COST OF PROJECT Answer here
Outline associated risks Answer here
Lender documentation required for submission to lender Answer here
Scope out the process from acceptance of proposal to unconditional approval Answer here
Financial risks associated with this new facility Answer here
Project timeline Answer here
Provide relevant disclosures to clientconcerning remuneration
Fees payable by you to us. These fees are payable by you. $ Answer here
Commission is payable for: Answer here
Commission payable by: Answer here
Commission payable to: Answer here
Reasonable estimate of commission: Answer here% of the amount of credit limit shortly after the finance isprovided. We estimate this to be $ Answer here.
Answer here % p.a. of your amount owing from time to time payablemonthly. We estimate the largest monthly payment tobe$Answer here.
Invite client to ask questions Answer here
Authority to proceed Answer here
Assessor feedback for Section 3 Task 2
Assessor feedback Resubmission required?
No
Section 3 Task 3: Implement complex loan structures
Rahn and Deepa have accepted your recommendations and have given you authority to proceed with theirapplication.
As part of implementing their loan application, you are required to prepare a formal written loan submission to the lender for pre-approval.
Note:Lender templates, credit policies and submission requirements vary from lender to lender. For this task, you can use the template called Credit Memorandum (or follow the structure as a guide) and/or any of the other example tables provided in the Toolbox.
Your loan submission must include:
details of borrowers and their contact details
borrowers backgrounds, including ability to manage projects or possible use of building expert
an overview of the proposal what the finance is for, the proposed structure and loan recommended. Include:
product types
deposit amount (if required)
loan amounts
terms
interest rates
interest repayments.
full details of the security being offered
a servicing table to establish the capacity to service the debt for the two remaining units. Include:
statutory costs and any relevant fees
the loan for the two remaining units (loan amount will be 80% of the completion value)
outline the debt servicing position
the projected rental income
interest-only repayments
the security and LVR position.
highlight the relevant risks. Include transactional, economic and personal risks and how they can bemitigated
any other information that is relevant to assist the lender provide an approval
your comments and recommendations for this loan proposal
a list of the documents that you would attach in your written submission. (You can assume that youhave all of the necessary approvals for the construction and have obtained a valuation.)
(800 words)
Notes: Any assumptions you make should be listed, and not conflict with the case study information already provided.
You are to write a formal submission to the lender, or complete a Word document template and copyandpasteinto the student response box.
Student response to Section 3 Task 3
Answer here
Assessor feedback for Section 3 Task 3
Assessor feedback Resubmission required?
No
Section 3 Task 4: Detailing analysis findings
When a consumer loan falls under the protection of the National Consumer Credit Protection Act 2009 (NCCP Act), there are disclosure obligations that the broker must abide by.
Assume the following:
Rahn and Deepas loan falls under the NCCP Act.
You are about to provide the client with credit assistance.
Note: Refer to the Toolbox for helpful links to complete Task 4 questions.
Section 3 Task 4: Question 1
Which disclosure document must be provided to the client at the initial meeting?
(4 words)
Student response to Section 3 Task 4: Question 1
Answer here
Assessor feedback for Section 3 Task 4: Question 1
Assessor feedback Resubmission required?
No
Section 3 Task 4: Question 2
In order for you to collect and store client information and conduct a credit check, what document would you need to get signed by the client?
(10 words)
Student response to Section 3 Task 4: Question 2
Answer here
Assessor feedback for Section 3 Task 4: Question 2
Assessor feedback Resubmission required?
No
Section 3 Task 4: Question 3
Your clients have advised you they are unsure what the term cross-collateralisation means. Explain cross-collateralisation to the clients.
(50 words)
Hint/Tip: Refer to the topic notes.
Student response to Section 3 Task 4: Question 3
Answer here
Assessor feedback for Section 3 Task 4: Question 3
Assessor feedback Resubmission required?
No
Section 3 Task 4: Question 4
Given that Rahn and Deepa want to own the new property equally, claim taxation benefits and maintain ownership if one party passes away, although stamp duty implications may be involved, how should they register their ownership interest on the Certificate of Title?
Hint/Tip: Refer to the Toolbox for a helpful link.
(10 words)
Student response to Section 3 Task 4: Question 4
Answer here
Assessor feedback for Section 3 Task 4: Question 4
Assessor feedback Resubmission required?
No
Section 3 Task 4: Question 5
In Task 1 you identified risks that concern Rahn and Deepas property development proposal. From the list of risks you identified, choose two (2) risks and discuss the following:
(a)Why do you think it is a risk to the client and/or the lender?
(b)If the risk was to eventuate, what could be the consequences for the clients and/or the lender?
(c)How could these risks be mitigated?
(20 words)
Student response to Section 3 Task 4: Question 5
Answer here
Note: You may also need to conduct your own independent research to answer these questions.
Assessor feedback for Section 3 Task 4: Question 5Assessor feedback Resubmission required?
No
Assessor feedback for Section 3[insert feedback]
Date assessed: Click here to enter a dateDoes the student need to resubmit? No
Questions that need to be resubmitted First submission Not yet demonstrated
Resubmission Not applicable
To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Section 4: Complex lending and broking Identifying, developing, presenting and implementing complex broking options
Section 4 Task 1: Complex collateral (specialised security)
Note: Refer to the Toolbox for helpful links to complete Task 5 questions and topic notes 1-2.
Section 4 Task 1: Question 1
(a) Explain the risks for a lender when taking rural land as security. Provide one (1) example.
(b) Explain the risks are for the client when purchasing rural land. Provide one (1) example.
(50 words)
Student response to Section 4 Task 1: Question 1
Answer here
Assessor feedback for Section 4 Task 1: Question 1
Assessor feedback Resubmission required?
No
Section 4 Task 1: Question 2
(a)Some properties are heritage listed, for example hotels and banks of a pioneering nature.Explain what this means.
(b)Explain one (1) risk for the purchaser of buying a heritage-listed property.
(c)Explain one (1) risk for the lender of taking a heritage-listed property as security.
(100 words)
Student response to Section 4 Task 1: Question 2
Answer here
Assessor feedback for Section 4 Task 1: Question 2
Assessor feedback Resubmission required?
No
Section 4 Task 1: Question 3
Describe the purpose of an environmental site assessment (ESA) and explain the main steps involved in producing an ESA.
(80 words)
Student response to Section 4 Task 1: Question 3
Answer here
Assessor feedback for Section 4 Task 1: Question 3
Assessor feedback Resubmission required?
No
Section 4 Task 1: Question 4
Why would a lender request an ESA? What might this reveal if it is requested?
(40 words)
Student response to Section 4 Task 1: Question 4
Answer here
Assessor feedback for Section 4 Task 1: Question 4
Assessor feedback Resubmission required?
No
Section 4 Task 1: Question 5
(a) Explain how an Indigenous Land Use Agreement (ILUA) might assist with the acquisition of land subject to native title.
(b) What is one (1) limitation of an ILUA?
(50 words)
Student response to Section 4 Task 1: Question 5
Answer here
Assessor feedback for Section 4 Task 1: Question 5
Assessor feedback Resubmission required?
No
Section 4 Task 1: Question 6
When borrowing against specialised security, there are often impacts such as additional loan approval processes that are required. Describe two (2) additional processes that may impact a loan application whenborrowing against specialised security.
(100 words)
Student response to Section 4 Task 1: Question 6
Answer here
Assessor feedback for Section 4 Task 1: Question 6
Assessor feedback Resubmission required?
No
Section 4 Task 2: Complex loan structures
Section 4 Task 2: Question 1
(a)List three (3) types of loan transactions that may be considered to be complex loans.
(b)Provide two (2) examples of how a clients application with special financial circumstances (such as offering a specialised property as security or requiring a complex loan structure) might beimpacted.
For example, additional requirements made by the lender.
(50 words)
Student response to Section 4 Task 2: Question 1
Answer here
Assessor feedback for Section 4 Task 2: Question 1
Assessor feedback Resubmission required?
No
Section 4 Task 2: Question 2
Explain how lending limits may be impacted for loans secured by rural property.
(100 words)
Hint/Tip: Refer to your topic notes and Toolbox to answer this question.
Student response to Section 4 Task 2: Question 2
Answer here
Assessor feedback for Section 4 Task 2: Question 2
Assessor feedback Resubmission required?
No
Section 4 Task 2: Question 3
(a)Provide one (1) example of when a client may require a bridging loan.
(b)List and explain two (2) risks for the client when obtaining a bridging loan.
(75 words)
Hint/Tip: In addition to the topic notes, you may be required to undertake your own research. There is a link provided in the Toolbox.
Student response to Section 4 Task 2: Question 3
Answer here
Assessor feedback for Section 4 Task 2: Question 3
Assessor feedback Resubmission required?
No
Section 4 Task 2: Question 4
(a)Provide one (1) example of when a client may require an equity release product (e.g. reverse mortgage).
(b)What three (3) factors are taken into consideration when determining how much the client can access with this type of lending?
(75 words)
Hint/Tip: In addition to the topic notes, you may be required to undertake your own research. There is a link provided in the Toolbox.
Student response to Section 4 Task 2: Question 4
Answer here
Assessor feedback for Section 4 Task 2: Question 4
Assessor feedback Resubmission required?
No
Section 4 Task 2: Question 5
List the supporting documentation (a minimum of four (4)) you would request from a business client youwould need to forward to the lender along with loan application.
(20 words)
Student response to Section 4 Task 2: Question 5
Answer here
Assessor feedback for Section 4 Task 2: Question 5
Assessor feedback Resubmission required?
No
Section 4 Task 2: Question 6
(a)As a broker you can assist the client and the lender with the loan implementation process. This task requires you to establish the steps required to effectively monitor loan submission procedures. List a minimum of seven (7) steps that you (as the broker) can take to assist with the loan submission, from collection of supporting documentation through to the collection of fees and settlement or loan drawdown.
(b)What steps can you take to ensure the privacy of your clients information when sending and storing their supporting documents and loan application details?
(100 words)
Hint/Tip: Refer to your topic notes for the suggested implementation steps.
Student response to Section 4 Task 2: Question 6
Answer here
Assessor feedback for Section 4 Task 2: Question 6
Assessor feedback Resubmission required?
No
Section 4 Task 2: Question 7
The implementation process can take time, organisation and requires follow-up. This part of the process isvital for cementing the relationship with both the client and lender.
What time management tools and techniques can you use to support the implementation process to ensure it runs smoothly and is completed on time for your client and the lender? Provide at least two (2).
(20 words)
Hint/Tip: Refer to the Toolbox for a helpful link.
Student response to Section 4 Task 2: Question 7
Answer here
Assessor feedback for Section 4 Task 2: Question 7
Assessor feedback Resubmission required?
No
Section 4 Task 3: Legislation and codes of practice
Section 4 Task 3: Question 1
(a)Identify the legislation that amends the National Credit Code, which provides negative equity protection for reverse mortgage borrowers.
(b)Explain what protection is provided to those consumers.
(70 words)
Student response to Section 4 Task 3: Question 1
Answer here
Assessor feedback for Section 4 Task 3: Question 1
Assessor feedback Resubmission required?
No
Section 4 Task 3: Question 2
Briefly describe a finance and mortgage brokers obligations under the best interests duty.
(40 words)
Hint/Tip: Refer to the Toolbox.
Student response to Section 4 Task 3: Question 2
Answer here
Assessor feedback for Section 4 Task 3: Question 2
Assessor feedback Resubmission required?
No
Section 4 Task 3: Question 3
Write an email to a client outlining the complaints resolution process in accordance with the Australian Financial Complaints Authority (AFCA). (Ensure you outline what AFCA encourages clients to do before making a complaint to them.)
(100 words)
Hint/Tip: Refer to the Toolbox for a link to AFCA.
The purpose of this task is to communicate the complaints resolution process to the client. Therefore, it is important that your response is in an email format.
Student response to Section 4 Task 3: Question 3
Answer here
Assessor feedback for Section 4 Task 3: Question 3
Assessor feedback Resubmission required?
No
Section 4 Task 3: Question 4
Federal and state legislation can vary when delivering a financial service.
The NCCP Act requires a credit guide, which includes commission arrangements, to be provided to a client as soon as practicable after it is likely that a lender or financial service provider (you) will provide aconsumer with credit assistance.
Explain how the requirements of the NCCP Act differ from those of NSW Fair Trading in regards to thetiming of disclosure of referral fees or commissions being paid or received.
(40 words)
Hint/Tip: Refer to the Toolbox for a link to the NSW Fair Trading disclosure obligations concerning commissions.
Student response to Section 4 Task 3: Question 4
Answer here
Assessor feedback for Section 4 Task 3: Question 4
Assessor feedback Resubmission required?
No
Assessor feedback for Section 4[insert feedback]
Date assessed: Click here to enter a dateDoes the student need to resubmit? No
Questions that need to be resubmitted First submission Not yet demonstrated
Resubmission Not applicable
To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Section 5: Ethical decision-making frameworks and principles
Before you begin this topic, you are required to read Case study 4, which is located in the subject room.
Case study 4
Section 5 Task 1: Frame the ethical question applicable to the situation
Section 5 Task 1: Question 1
Investigate whether the assumptions and client advice provided by the broker in Scenario A align with industry practice.
(50 words)
Student response to Section 5 Task 1: Question 1
Answer here
Assessor feedback for Section 5 Task 1: Question 1
Assessor feedback Resubmission required?
No
Section 5 Task 1: Question 2
Identify the two (2) ethical principles that arise in each of the three (3) scenarios from the case study and list them in the table below.
(150 words)
Student response to Section 5 Task 1: Question 2
Issue identified
Example: The broker submitted false information.
Scenario A
Answer here
Answer here
Scenario B
Answer here
Answer here
Scenario C
Answer here
Answer here
Assessor feedback for Section 5 Task 1: Question 2
Assessor feedback Resubmission required?
No
Section 5 Task 1: Question 3
The lender in Scenario A became aware of the brokers instructions to the clients and advised the broker that his actions were not acceptable.
In their defence, the broker stated that they had heard this was the right thing to do at a professional development day that I attended in the past and I confirmed this by asking other brokers who agreed withmy actions.
Identify at least two (2) biases that are revealed in the statements made by the broker and explain how they might impact the brokers understanding of the situation.
(50 words)
Student response to Section 5 Task 1: Question 3
Answer here
Assessor feedback for Section 5 Task 1: Question 3
Assessor feedback Resubmission required?
No
Section 5 Task 1: Question 4
Explain what regulatory requirements may be breached if the situation in Scenario B is not addressed.
(20 words)
Student response to Section 5 Task 1: Question 4
Answer here
Assessor feedback for Section 5 Task 1: Question 4
Assessor feedback Resubmission required?
No
Section 5 Task 1: Question 5
Many organisations have a vision and/or mission statement and a set of values that are visible on their website to the public and their clients.
The ethical situation that arises in Scenario B has the potential to conflict with a lenders purpose andvalues.
Identify two (2) examples where the situation in Scenario B could conflict with an organisations strategy, purpose and/or values.
For this task you may use Westpacs Strategy and Purpose, which can be located on their website.
(20 words)
Student response to Section 5 Task 1: Question 5
Answer here
Assessor feedback for Section 5 Task 1: Question 5
Assessor feedback Resubmission required?
No
Section 5 Task 1: Question 6
Scenario B resulted in the clients lodging a complaint with the Australian Financial Complaints Authority, (AFCA), against both the lender and the broker.
Evaluate the possible impact on the lenders reputation if the action of cancelling the loan became known in the public domain. Explain how the organisation at fault could be impacted.
(50 words)
Student response to Section 5 Task 1: Question 6
Answer here
Assessor feedback for Section 5 Task 1: Question 6
Assessor feedback Resubmission required?
No
Section 5 Task 2: Determine ethical response to the situation
Section 5 Task 2: Question 1
Scenario A resulted in the clients defaulting on their home loan 12 months after settlement, as it took them several months to find new employment. Each party to the transaction claimed they received poor advice from the broker.
Identify the key stakeholders (parties) and analyse the potential impact on the parties involved.
(100 words)
Student response to Section 5 Task 2: Question 1
Answer here
Assessor feedback for Section 5 Task 2: Question 1
Assessor feedback Resubmission required?
No
Section 5 Task 2: Question 2
You have been asked to determine an ethical response to Scenario B. You are required to analyse the situation using the RADAR ethical decision-making framework. Your response must include commentary on each aspect of this framework, as follows:
Recognising the event
Assessing the situation
Deciding what to do
Agreeing the way forward
Reporting.
(150 words)
Hint/Tip: The framework is located in your topic notes, and a helpful link is also provided in the Toolbox.
Student response to Section 5 Task 2: Question 2
Answer here
Assessor feedback for Section 5 Task 2: Question 2
Assessor feedback Resubmission required?
No
Section 5 Task 2: Question 3
The broker in Scenario A was interviewed about his actions and made the following comments:
Most of my business is settled with this particular lender, and the loans manager is a personal friend of mine. There is nothing unusual about the way I handled this situation. Im not that comfortable dealing with clients this way, but its the way brokers operate. I know this is true because my mentor didnt see anything wrong by not notifying the lender.
Identify the situational and/or psychological barriers that may have impeded the brokers response to this ethical situation by listing a minimum of two (2) examples of conflict of interest and at least two (2) examples of where the brokers views were biased.
(50 words)
Student response to Section 5 Task 2: Question 3
Conflicts of interest:
Answer here
Answer here
Biased views:
Answer here
Answer here
Assessor feedback for Section 5 Task 2: Question 3
Assessor feedback Resubmission required?
No
Section 5 Task 2: Question 4
You have been asked to determine an ethical response to Scenario A having now heard what the broker has had to say about his actions at Task 2 Question 3 above. Name at least two (2) people or organisations you might seek guidance from as you would consider them to be ethical advisers.
(10 words)
Student response to Section 5 Task 2: Question 4
Trusted ethical advisers:
Answer here
Answer here
Answer here
Assessor feedback for Section 5 Task 2: Question 4
Assessor feedback Resubmission required?
No
Section 5 Task 2: Question 5
Describe the strategies and processes you would formulate for responding to the situational and psychological barriers you identified in Task 2 Question 3 above.
(80 words)
Student response to Section 5 Task 2: Question 5
Situational barriers Strategies Processes
Answer here Answer here Answer here
Answer here Answer here Answer here
Psychological barriers Answer here Answer here Answer here
Answer here Answer here Answer here
Assessor feedback for Section 5 Task 2: Question 5
Assessor feedback Resubmission required?
No
Section 5 Task 3: Develop implementation plan and carry out ethical response to the situation
As the compliance manager for the lender, you have been asked to implement an ethical response to Scenario B in order to set out what conduct is expected across the broker network.
Important: Although you will need to consider the ethical situation described in Scenario B, the focus ofyour response to the following questions needs to be on developing a plan to implement changes within the lender organisation and the broker network. You are required to develop an implementation plan as detailed below.
Section 5 Task 3: Question 1
Identify:
(a)the data that needs to be gathered
(b)which parties you will need to communicate with
(c)the sequence of the steps that you will take to complete these tasks.
(75 words)
Student response to Section 5 Task 3: Question 1
Answer here
Assessor feedback for Section 5 Task 3: Question 1
Assessor feedback Resubmission required?
No
Section 5 Task 3: Question 2
Identify a minimum of three (3) examples of reasoning or rationalisation that may be encountered by someone speaking up on ethical issues, and suggest how you would respond to those behaviours.
(25 words)
Student response to Section 5 Task 3: Question 2
Reasoning/Rationalisation Appropriate Response
Answer here Answer here
Answer here Answer here
Answer here Answer here
Assessor feedback for Section 5 Task 3: Question 2
Assessor feedback Resubmission required?
No
Section 5 Task 3: Question 3
As stakeholders may be impacted by an ethical response, it is important to manage stakeholder risks and concerns that might arise during this process.
(a) Identify the four (4) steps in the stakeholder risk management process, and outline the key objectives of each step in the table below.
(b)Describe the communication strategies that you would use to ensure that the risks are mitigated and that your stakeholders concerns are acknowledged.
(50 words)
Hint/Tip: Refer to your topic notes.
Student response to Section 5 Task 3: Question 3
Answer here
Process: Stakeholder risks management steps Key objectives
Answer here Answer here
Answer here Answer here
Answer here Answer here
Answer here Answer here
Answer here
Assessor feedback for Section 5 Task 3: Question 3
Assessor feedback Resubmission required?
No
Section 5 Task 3: Question 4
(a)Under what circumstances would you seek support from a trusted colleague in order to effectively carry out the ethical response? Provide three (3) examples in the table below.
(b)Under what circumstances would you act independently in order to effectively carry out the ethical response? Provide a minimum of three (3) examples in the table below.
(20 words)
Student response to Section 5 Task 3: Question 4
(a) Seek support from a trusted colleague:
Answer here
Answer here
Answer here
(b) Act independently:
Answer here
Answer here
Answer here
Assessor feedback for Section 5 Task 3: Question 4
Assessor feedback Resubmission required?
No
Section 5 Task 4: Evaluate the outcomes of the ethical response
Case study 5
One of Petas most important customers called yesterday seeking an explanation for the delay in receiving a valuation report for a loan application he had lodged last week. Peta had asked a colleague Alex to order a valuation (normally completed within five days), but it had not arrived.
When Peta asked Alex whether the valuation instructions had been issued, Alex said, I sent them by email to the valuer a week ago. Later, as Peta passed Alexs desk and woke the laptop from the screensaver, Peta could clearly see that the email was sent just two days ago. This was typical of the poor customer service provided by the organisation due to ongoing problems with staff levels, and it is not the first time Alex had been dishonest in order to cover up mistakes.
However, Peta knew that Alexs job was at risk and decided the right thing to do was to protect her colleague by calling the client back with the news that the valuer had received the instructions but had not yet completed the valuation report. As Peta talked with the client, she learned that the delay of the valuation had resulted in the loss of the clients opportunity to purchase the property.
Peta later heard from the manager that the client had complained and decided to not use the mortgage broking services provided by the organisation in future. Peta listened carefully when her manager later expressed his confusion about how this clients attitude towards him had been hostile. Peta, knowing that both Alex and her own jobs were now at risk, said nothing in response.
Section 5 Task 4: Question 1
(a)Identify a minimum of three (3) ethical situations/actions described in the case study.
(b)Evaluate whether the issues were resolved and if other courses of action should have been taken.
(50 words)
Student response to Section 5 Task 4: Question 1
Answer here
Assessor feedback for Section 5 Task 4: Question 1
Assessor feedback Resubmission required?
No
Section 5 Task 4: Question 2
Determine the consequences for Peta and the other affected parties from the actions she took.
(30 words)
Student response to Section 5 Task 4: Question 2
Answer here
Assessor feedback for Section 5 Task 4: Question 2
Assessor feedback Resubmission required?
No
Section 5 Task 4: Question 3
Analyse what the outcomes of Petas actions reveal about her own and the organisations values.
(25 words)
Student response to Section 5 Task 4: Question 3
Answer here
Assessor feedback for Section 5 Task 4: Question 3
Assessor feedback Resubmission required?
No
Section 5 Task 4: Question 4
Identify improved approaches for responding to future ethical situations that might arise from the circumstances described in the case study.
(25 words)
Student response to Section 5 Task 4: Question 4
Answer here
Assessor feedback for Section 5 Task 4: Question 4
Assessor feedback Resubmission required?
No
Section 5 Task 5: Dealing with workplace ethics
Case study 6
Rhonda is working as a loans processing officer. She is concerned about another colleague Yen who appears to be favouring the processing of one of the referrers applications to the detriment of other submissions.
Talking with one of the other colleagues, Rhonda was informed that Yen has been lunching regularly with the referrer and there was concern that Yen might be getting a kick back to provide preferential treatment and processing their loans before others.
Although Rhonda didnt want to directly accuse the colleague of unethical behaviour, she felt it was important to report the issue as it was starting to affect the workflow of the other loan processing team.
After listening to Rhondas concerns, the Ethics Manager decided to investigate the situation in line with the companys policy and procedures.
The company policy states:
Conflicts of interest
You should not undertake any activities, seek financial interests from our partners, or have relationships outside your job that could denote a potential conflict of interest.
This includes preferential treatment of a referrer or other stakeholders, relatives or close personal friends.
Doing business
We must act with integrity and professionalism in doing business with clients, referrers and other stakeholders.
Gifts and improper payments
Gifts of money, goods, services or other favours must not be asked for or accepted. Small tokens and reasonable hospitality may be accepted, provided they do not place you under any obligation and will not be misconstrued.
Compliance with laws
Our dealings with referrers must comply with relevant legislation and regulations. The company cannot accept circumstances where any employee allows a situation to arise where our company may not fully comply with all applicable laws.
If you do not know how to raise an issue in your organisation, you should contact your manager in the first instance to clarify. Should, for any reason, the process still not be transparent, you should contact the compliance manager, highlighting your concerns or the lack of process. Any issues raised with the compliance manager will be treated in the strictest confidence.
Section 5 Task 5: Question 1
After listening to Rhonda and interviewing Yen, the Ethics Manager had to determine if any company policies had been breached. Answer the following with reference to the companys ethics policy.
(a)Was it appropriate for Rhonda to raise concerns with the ethics manager about Yens conduct?
(b)What breaches of the companys ethics policy have you identified?
(100 words)
Student response to Section 5 Task 5: Question 1
Answer here
Assessor feedback for Section 5 Task 5: Question 1
Assessor feedback Resubmission required?
No
Section 5 Task 5: Question 2
It was concluded that Yen was providing preferential treatment to the referrer and received a couple of generous gifts for providing this service. It was not determined that Yen had committed any breaches of the legislation but may have breached conflict of interests obligations.
Conduct research and determine if Yen breached any codes of practice, including the Banking Code of Practice orindustry association codes, ASIC regulations or legislation (state or federal).
(50 words)
Student response to Section 5 Task 5: Question 2
Answer here
Assessor feedback for Section 5 Task 5: Question 2
Assessor feedback Resubmission required?
No
Assessor feedback for Section 5[insert feedback]
Date assessed: Click here to enter a dateDoes the student need to resubmit? No
Questions that need to be resubmitted First submission Not yet demonstrated
Resubmission Not applicable
To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.