Lending Responsibly

Lending responsibly and dealing with customers

At Gem we are committed to ensuring that we provide a great experience for our customers whilst also ensuring that we always lend responsibly. We want to remind you of our expectations of you, in being an accredited broker with Gem, as well as your own obligations under the CCCFA Act and other similar regulations that apply, when it comes to interviewing customers and capturing all needs, income and expenses in their application. 

We continue to monitor all applications and customer information provided. Any breaches of Responsible Lending obligations or Gem process and policy may result in actions against the Broker.

Your role in lending responsibly

Listed below are some critical points to remember when collecting customer information and completing loan submissions:

• Meet with the customer, ask all questions within the loan application, read all of the mandatory scripting to gain the customers consents, and capture all customer information accurately.
• It is your (the broker’s) responsibility to ensure you are making reasonable enquiries into the customer’s requirements and objectives with their financial situation and record this information accurately in the application. If the information doesn’t make sense or doesn’t look accurate it is your obligation to investigate further to uncover the correct information.
• It is your responsibility to ensure the customer understands the difference between a Variable and Fixed interest rate, and between a Secured and Unsecured loan agreement.
• If you deliberately misrepresent customer information or do not make sufficient inquiries to uncover your customer’s true situation, your accreditation with Gem will be suspended and/or terminated.
• Always use your own Broker code and login, do not share your login information with any other people (outside of your administrative team).
• Ensure you protect your password and keep it secure. Always log off after use.
• All assistants that communicate with Gem on your behalf must have their details registered with Gem.
• Never enter dummy data into any fields, such as the Reference fields, as it may cause avoidable delays.
• You must provide the customer a copy of the loan contract, along with the full Terms and Conditions (including COU, initial disclosure statement, key product summary and disclosures).

Dealing with customers

Ensure you accurately capture the following when completing Personal Loan submissions including:

• Number of Dependents: number of people who are financially dependent on the applicant (other than a spouse/partner)

• Relationship Status

• Residential status:

• If a customer owns their home outright, select ‘owner’
• If a customer has a mortgage on the house they live in select ‘mortgage’
• If a customer has an investment property but is renting, select ‘renting’
• Expenses: to be captured as the applicant’s share of monthly values. Only include their share of the listed expenses (which is not necessarily the total for the household). Make sure you record the information the customer provides accurately. Don’t round up or down and investigate any expenses that don’t appear correct. Check for any extraordinary expenses that the customer may need to pay less frequently.

• Debts: you must capture ALL debts - even if the debt is in joint names and/or repayments shared, the entire amount must be recorded. This includes capturing all credit card, personal loan, motor loan and mortgage debts. Capture the original principle/limit, current balance and full repayment amount (mortgage repayments are the only repayment that we allow to be split). In the application capture the entire original principle, current balance and the customer’s share of repayment where applicable. We may still apply our own minimum thresholds to these repayments.

• Changes to current financial circumstances: you must enquire as to whether the customer can foresee any adverse changes to their current financial circumstances. If yes, provide details of the foreseeable change.

• Product Selection: maintain a record of the discussion/s had with the customer on the product selected (i.e. variable/fixed).

• Bank Account: Confirm the Bank Details you enter for the Direct Debit and Disbursement (when applicable) are in the names of the applicant.

Please carefully read the below privacy statements and ensure that you have read and understood what the expectations are, when submitting applications with Gem;

• You must ensure all Borrowers agree with the following statements, prior to an application being submitted on their behalf:
• I confirm that the information contained in this Application is complete and correct and truly represents my position at the time of signing the Application.
• I acknowledge and agree to the matters set out in the Privacy Notice (located on our website - https://www.gemfinance.co.nz/privacy/) which sets out how Gem collects, uses and discloses my personal information.
• If you are licensed in your own right, you confirm that you hold and will continue to maintain status of the below:
• A New Zealand Certificate In Financial Services – Level 5;
• A Financial Services Provider Registration; 
• A Professional Indemnity Insurance Policy acceptable to the FAP (Financial Advice Providers) Licence I operate under
• Continue to remain employed, following the FAP licence holders process and rules as approved by under the FMA (Financial Markets Authority)
• You acknowledge that, except as described directly below, you have no authority to act as an agent for Gem or in any way act on behalf of Latitude Financial Services Limited and that your appointment as an adviser is  an appointment made solely by the Introducer named in Schedule 1 (of the Accreditation Application).

• You understand that you will, at Latitude Financial Services Limited’s request (and in each case subject to the express terms of its request), be its agent when:
• Performing a statutory obligation on Latitude Financial Services Limited’s behalf;
• Giving a pre-contractual disclosure (including but not limited to full terms and conditions – COU, initial disclosure statement, key product summary and disclosures) documents to a prospective borrower;
• Identifying and/or verifying the identity of a prospective customer in accordance with the AML/CFT legislation and requirements; and
• Providing the prospective borrower with our privacy notice (https://www.gemfinance.co.nz/privacy/)  and obtaining a required privacy consent from them, prior to collecting, using or disclosing their information.
• You agree that you will always store Gem customers personal information in accordance with the Privacy Policy set out in the FAP you operate under and approved by the FMA. This includes ensuring access to customers personal information is restricted only to those that require the access. 

• You agree that electronic documents will be stored on systems that meet industry best practice around data retention, storage and encryption practices, and have necessary controls such as updated anti-virus and anti-malware installed. Electronic equipment used in the provision of the services will have any information securely destroyed prior to it being re-purposed or sold.

• You agree that physical documents will be stored in a locked file cabinet and will be destroyed using industry best practices (e.g. crosscut shredder).

• If you are aware of any Information Security incident, including an Eligible Data Breach incident, involving Gem customers personal information, you will follow the appropriate process internally and ensure Gem is notified of the Data Breach incident within 24 hours. 

• You will not share you Gem adviser login information with any other person (outside of your organization) and will do what is required to re-set login information in the event you believe it may be compromised. 

Please carefully read the following privacy statements and ensure you have read and understand what the expectations are when submitting applications with Gem;

• You must comply with any policies, procedures and training requirements that we notify you of.

• From time to time, we may publish target market determinations in connection with the products we issue. If you distribute our products, you must ensure that: 
• Any retail product distribution conduct you engage in is consistent with the target market determination published by us for the relevant product; 
• You do anything we reasonably require you to do to help us comply with our regulatory obligations as an issuer of a financial product;
• You must provide us will with all information and documents that we require you to provide, at the times requested. The types of information and documents we may require may be set out in the manuals, policies or guidelines provided by us to you from time to time. It may also be set out in the target market determination for the product. 

• You agree to audits being conducted in connection with your compliance, with your obligations under our arrangement with you. We may conduct this audit as part of an existing audit right we have under that arrangement or after providing you with reasonable notice. 

Many brokers build their business through referral sources they have developed. These sources vary and can include any type of business, some of the more common examples are car yards, real estate agents, accountants, trades etc. It’s  important as a broker that you know your referral sources.

A large portion of complaints that we receive can be  traced back to unscrupulous referral partners. These incidents have the potential to cause damage to our collective brands and often have a financial impact for you (the broker), your aggregator and us (the lender).

At Latitude we only want to fund loans from reputable sources. We expect that the applications you (the broker) submit from referral sources are from referrers you (the broker):

1. Have conducted your due diligence on.
2. Understand the products they sell and the type of businesses they run.

It is also important to remember, it’s your responsibility as a broker to interview the client, confirm and/or collect all application information from the client and ensure you are meeting all responsibilities as a Financial Service Provider or Nominated Representative. These responsibilities should never be handled by the referral source.

Exclusion

If you have referrers that fall into the below categories, please refrain from sending these applications to us.

• Referral sources where you don’t know who they are and/or what they sell.

• Referral sources that have poor reputations and/or that sell high risk products.

• Referral sources that sell speculative products where a monetary return is promised as part of the product being sold – most common forms of these are businesses that promote/promise earnings from the on sale of their product to others; or earnings from signing up additional parties to that product. These can sometimes be disguised as training courses.

Your Role in Fraud Prevention

Application fraud continues to pose a major threat to the consumer finance industry, with identity theft particularly prevalent. This type of fraud involves one party stealing the identity of another party to lodge a credit application and it has far reaching effects in the market. It not only impacts the consumers who have had their identities stolen, but also causes losses to lenders and adversely affects broker reputation.

We all play a part in preventing fraud by being vigilant for any potential indicators. It often comes down to using your gut instinct where something just doesn’t feel right or appears too good to be true, or where you don’t feel like the person you are interacting with is who they say they are.

Warning Signs

Suspicious behaviour or profile of the customer

Be on the lookout for the following characteristics as they can be a strong indicator of identity theft:

• The voice or language of the “customer” is a mismatch to their profile – i.e. there appears to be a mismatch in sex, age or ethnicity.

• The applicant is hesitant in providing details or is overly pushy or persistent on getting the funds immediately.

• The customer avoids phone calls and only communicate via email or text message.
• A friend or relative is translating on behalf of the applicant.

• Any requested documents are either provided unrealistically quickly or there is hesitation in providing them at all. For example, if a bank statement and Summary of Earnings were provided within minutes of being requested.

• The customer refuses to complete the biometric identity verification process.

• The income or asset position of the applicant appears unusual for their profile. For example:
• Café worker earning $100k+ p.a.
• 22-year-old owning their home outright.
• Self-employed customer with high income but bank statement or asset position does not support income claimed.