What Training Do ACL Representatives Need In Order to Provide Home Loan Credit Assistance?

Introduction

Ensuring that credit representatives are adequately trained is a fundamental obligation for holders of an Australian Credit Licence (ACL), particularly when these representatives provide home loan credit assistance. These specific training requirements, stipulated by the Australian Securities and Investments Commission (ASIC) under the National Consumer Credit Protection Act 2009 (Cth), are designed to ensure representatives possess the necessary competence to assist consumers with mortgage products, thereby upholding consumer protection and maintaining compliance.

This guide details the specific initial and ongoing training obligations for credit representatives involved in home loan credit assistance, as outlined in ASIC’s Regulatory Guide 206 (RG 206). It aims to provide clarity for Australian credit licensees and their authorised credit representatives on navigating these crucial aspects of credit legislation to ensure full adherence to the requirements for an ACL.

Defining Home Loan Credit Assistance for ACL Training Purposes

What Constitutes Home Loan Credit Assistance Under Your Australian Credit Licence

For the purpose of training requirements under an ACL, “home loan credit assistance” is defined by ASIC as providing credit assistance in relation to a credit product where the credit is secured by real property.

This definition is crucial for determining the appropriate training for your credit representative. It encompasses situations where assistance is provided for mortgage products, regardless of whether those products are:

• Offered by the Australian credit licensee itself
• Provided by a third-party lender

Understanding this definition is the first step for an Australian credit licensee in ensuring compliance with ASIC’s regulatory expectations. The nature of the security—being real property—is the key element that designates the credit assistance as “home loan” related, thereby triggering specific training obligations.

Distinguishing Between Third-Party & Own Credit Product Assistance for Training Compliance

ASIC makes an important distinction in its representative training requirements for home loan credit assistance, which directly impacts compliance obligations for an ACL. This distinction is based on whether the credit representative is assisting with the licensee’s own mortgage products or those of a third party.

The two main categories are:

• Third-party home loan credit assistance: This occurs when the credit assistance provided by a credit representative relates to a home loan (a credit product secured by real property) where neither the Australian credit licensee nor its representatives are the actual credit provider. Essentially, this involves broking loans from other institutions.
• Own credit product assistance: This category applies when a credit representative provides home loan credit assistance only in relation to credit products offered by their own Australian credit licensee.

This differentiation is fundamental because the specific initial and ongoing training requirements for a credit representative can vary significantly depending on which of these categories their activities fall under. Australian credit licensees must accurately identify the type of home loan credit assistance their representatives provide to ensure correct training and adherence to credit legislation.

Initial Training Requirements for Your Home Loan Credit Representatives

ASIC’s Qualification Requirements for Representatives Providing Third-Party Home Loan Credit Assistance

Credit representatives who provide home loan credit assistance for third-party products under an ACL must meet specific educational benchmarks. ASIC mandates that these representatives must hold at least a Certificate IV in Finance and Mortgage Broking (CFMB).

This qualification is a well-recognised industry standard, specifically relevant to the mortgage broking sector, and is crucial for maintaining compliance. The requirement underscores the importance ASIC places on ensuring that representatives assisting consumers with third-party mortgage products possess a foundational level of expertise.

The CFMB is designed to equip representatives with the necessary skills and knowledge to navigate the complexities of these credit activities.

Licensee-Determined Training for Representatives Assisting with Your Own Home Loan Credit Products

For credit representatives who exclusively deal with an Australian credit licensee’s own home loan credit products, the approach to initial training is more flexible. The Australian credit licensee is responsible for determining the appropriate training for these representatives.

However, this licensee-determined training must ensure that representatives can achieve the specific knowledge outcomes outlined by ASIC. While a specific qualification is not prescribed in this scenario, the onus is on the credit licensee to implement a training regime that adequately prepares their representatives.

This training must cover all necessary areas relevant to:

• The representative’s role
• The licensee’s own mortgage products

This comprehensive approach ensures they can engage in credit activities competently and meet the requirements for Australian credit licensees.

Key Knowledge Outcomes Your Representatives Must Achieve for Own Product Home Loan Assistance

When an Australian credit licensee designs training for representatives dealing only with their own home loan products, ASIC’s RG 206, specifically Table 2, outlines the essential knowledge and skills that this training must impart. These outcomes are critical for ensuring that representatives are adequately prepared to assist consumers effectively and maintain compliance with credit legislation.

The training must enable representatives to:

• Deal appropriately with consumers:
  • Gather all relevant information about a consumer’s personal and financial situation as needed
  • Establish and address consumers’ priorities and concerns regarding their home loan needs
• Understand types of home loan products and their characteristics:
  • Develop broad knowledge of the range of home loan products available within the lending industry, not just the licensee’s own
  • Gain general understanding of the loan process, various loan features, and associated fees, charges, and commissions
• Understand the economic and market context:
  • Acquire knowledge of the relevant economic environment, including factors like the business cycle, market influences, and inflation
  • Develop a basic grasp of financial and accounting concepts directly relating to home loans, such as interest rates
  • Become familiar with real estate terms and concepts (e.g., land titles)

Ongoing Training & CPD Requirements for Home Loan Credit Assistance Representatives

Authorised credit representatives who provide home loan credit assistance related to third-party credit products are subject to specific ongoing training requirements. These requirements help maintain their competence and ensure compliance with ACL obligations. This involves completing a minimum number of hours of continuing professional development (CPD) each year.

Annual CPD Training Requirements for Third-Party Home Loan Credit Assistance Representatives

ASIC mandates that these representatives must complete a minimum of 20 hours of CPD each year. This requirement, outlined in ASIC’s RG 206, serves an important purpose: ensuring representatives stay updated on:

• Industry changes
• Product developments
• Regulatory adjustments relevant to mortgage broking

The focus of this annual CPD is to ensure that representatives providing third-party home loan credit assistance maintain the necessary skills and knowledge to:

• Deal with consumers appropriately
• Understand the complexities of the mortgage market

This commitment to ongoing learning is crucial for any credit representative aiming to uphold high standards of service under their ACL.

CPD Options for Your Representatives Assisting with Own Home Loan Credit Products

For credit representatives who exclusively provide home loan credit assistance related to the Australian credit licensee’s own credit products, ASIC offers more flexibility in meeting ongoing training requirements. These representatives have two primary pathways to maintain their training compliance:

• Complete a minimum of 20 hours of CPD annually: This option mirrors the requirement for representatives dealing with third-party products, ensuring a consistent level of ongoing education across the board. The CPD should cover areas pertinent to their role and the licensee’s specific mortgage products.
• Undertake a regular knowledge update review: As an alternative, representatives can opt for a ‘knowledge update review.’ This must be supplemented by sufficient hours of CPD each year to enable the successful completion of that review. This pathway allows for a more tailored approach to maintaining up-to-date knowledge relevant to the licensee’s own product suite.

Choosing the appropriate CPD option is a decision for the Australian credit licensee, ensuring that their credit representative remains competent and adheres to the training requirements stipulated by ASIC.

Understanding the Knowledge Update Review Alternative for Your Training Compliance

The ‘knowledge update review’ presents an alternative to the standard 20-hour annual CPD for credit representatives who only assist with their Australian credit licensee’s own home loan credit products. This review is a formal assessment designed to test a representative’s understanding of key regulatory and market developments relevant to their specific role and industry sector.

Key aspects of the knowledge update review include:

• Administration: It must be administered by a registered training organisation (RTO) through a secure facility, ensuring the integrity and validity of the assessment.
• Focus: The review concentrates on essential updates in:
• • Credit legislation
  • Market trends
  • Product changes that could impact how a representative provides home loan credit assistance for their licensee’s products

• Frequency: ASIC specifies that these knowledge update reviews should typically be completed every three years.
• Supporting CPD: While opting for the review means the minimum 20 hours of annual CPD is not strictly mandated, representatives will still likely need to undertake a reasonable amount of CPD each year. This ongoing learning is necessary to maintain their knowledge of key developments and to successfully complete the periodic knowledge update review, ensuring ongoing training compliance.

This alternative allows Australian credit licensees to tailor ongoing training more specifically to representatives dealing solely with in-house mortgage products, provided the core competencies are maintained.

Conclusion

ACL representatives providing home loan credit assistance must satisfy both initial and ongoing ASIC training requirements, which encompass understanding key definitions, obtaining qualifications such as the CFMB for third-party assistance, completing licensee-determined training for proprietary credit products, and fulfilling CPD obligations through options like the 20-hour rule or knowledge update reviews.

Meeting these regulatory obligations under credit legislation is essential for ensuring compliance and effectively serving consumers. Because navigating these complex requirements can be challenging, Our lawyers for ACL applications offer trusted expertise and tailored guidance. Contact AFSL House today, to help your credit representatives meet all ASIC standards, secure your compliance, and achieve peace of mind.

Frequently Asked Questions for Australian Credit Licensees & Representatives