1. Mary Zakaria and Jayd Raffoul
Responsible Lending for Small Amount Credit Lenders
Mary Zakaria and Jayd Raffoul

2. What’s today about? Inquiries and Verifications
Rebutting the presumption of unsuitability
When CIO uses benchmarks and why
Case Studies

3. Make inquiries and verify!!

4. What are a small amount credit lender’s obligations?
make reasonable inquiries about a consumer’s requirements and objectives
make reasonable inquiries about a consumer’s financial situation,
take reasonable steps to verify the consumer’s financial situation, and
From 1 March 2013
4. obtain statements for accounts into which the consumer’s income is paid into.

5. Make inquiries and verify!!

6. Inquiries and Verification
What are reasonable inquiries?
Meeting internal guidelines is not a test
What information do you need and what does it tell you?
Requirements and Objectives matter

7. Make inquiries
and
verify!!

8. Presumptions of Unsuitability
Apply to small amount credit contracts:
Where the consumer is currently in default under an existing small amount credit contract, or
Has been a debtor under two or more small amount credit contracts in the 90-day period before the assessment

9. What do you need to obtain to rebut the presumption of unsuitability?
Further inquiries into other SACCs
Contact other lenders
Credit Files
Ask consumer

10. Make inquiries
and
verify!!

11. CIO’s use of benchmarks
“Why can CIO use benchmarks when we can’t?”

12. Quiz

13. Case Study 1 Sally comes into your store wanting a $1,000 loan.
She is still repaying a $500 loan with lender X.
She made the final payment for another loan she had with you an hour ago.
What information do you need from Sally to assess this loan application?

14. Case Study 2
Jess wants a $1,000 loan to put towards her daughter’s braces.
She is renting with her husband, and pays $600/week in rent.
She earns $75,000/year, and
Spends $60/week in petrol for her car.
What other types of expenses would you need to know about so that you can work out Jess’ living expenses?

15. Case Study 3
Tom wants a $2,000 loan so that he can repair his washing machine.
Based on the documents we have given you, what further inquiries do you need to make?

16. Case Study 4 Quick Money’s assessment of Matt’s loan
Monthly income: $2,800
Monthly living expenses: $840 (default 30% of income)
As a CIO case manager, how would you assess Matt’s living expenses?

17. Case Study 4 continued
Living expenses according to Quick Money: $840
Living expenses according to HEM: $1,309
Living expenses according to HPI: $1,540

18. Please come and see us in the Q&A session at 4pm
Thank you
Please come and see us in the Q&A session at 4pm