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Responsible lending disclosure obligations – Overview for credit licensees and representatives’

Background: Clinton and Jennifer Andrews live in Sydney with their two school-age children. They bought their home 15 years ago. With the rise in its value over time they have generated substantial equity and have decided to purchase an investment property. Recently they went to a real estate seminar where the presenter explained that it is possible with correct leverage to purchase more than one investment property. Consequently, they have decided to borrow 90% LVR on the investment property plus the LMI. The deposit, stamp duties and other costs will come from their ‘offset account’ attached to their home loan. They have requested not to use their current lender. After conducting research over the last six months they have decided to purchase a new four-bedroom home in outer Brisbane for $450,000 with a rental income of $450.00 per week. The real estate agent has recommended they contact you to arrange their finance. Their accountant has been providing some advice in relation to negative gearing benefits. The following tables are a summary of the details obtained from the couple during the fact find interview. The details provided include a description of the property they wish to purchase, their financial and employment details and the loan features that they require. Task 1 — Initial disclosures Following a personal introduction and before you begin gathering information about the clients’ existing financial situation or needs, there are certain disclosures you are required to make as a finance broker. These disclosures include the way you are remunerated and the range and limitation of your services. 1. There are four (4) documents listed in ASIC Information sheet INFO 146 ‘Responsible lending disclosure obligations – Overview for credit licensees and representatives’ that must be provided to customers. Refer to this Information sheet and the information contained in your topic notes to answer part (a) and (b) below. (a) Identify which of these four (4) documents you must provide your client before you commence providing credit assistance and explain the main disclosures relevant to that document. (40 words) (b) Identify which of these four documents you will provide the client should you intend to charge a broker fee and explain what is required for it to be valid. (40 words Task 2 — Gathering and documenting client information Complete the Client Information Collection Tool (located at the end of the assignment in Appendix 1) using the information provided in Case Study 1. Note: Any assumptions you make should be listed and should not be in conflict with the case study information already provided.

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