New vulnerability training rolled out to brokers

The code now requires lender signatories to “take reasonable steps” to confirm that any co-borrowers on a loan not receiving a “substantial benefit from the loan” (e.g. an equitable interest in the asset or payment of debts) understand the risks involved before approving the loan. 

Moreover, the code states that lenders would not approve a co-borrower loan in this instance unless they are “satisfied that [they] are not experiencing financial abuse”.

While lenders had previously been rolling out their own individual requirements to brokers regarding financial abuse, including asking brokers to complete a financial abuse declaration form, which both the Finance Brokers Association of Australia (FBAA) and Mortgage & Finance Association of Australia (MFAA) had urged members not to sign due to concerns over potential litigation and professional indemnity insurance breaches. 

However, the three associations have been working together over the past few months to develop a “common approach” to working with vulnerable customers.

Lenders have reportedly been training their staff on identifying financial abuse for several months, and equivalent training for brokers is now being rolled out by the two mortgage broker associations from this week.

The new module is a joint project of the ABA, FBAA and MFAA.

What the training entails

The online training covers some of the sections of the new Banking Code of Practice that are relevant to brokers in order to “provide a significant step-up in protections for customers and in ensuring extra care is taken with customers who may be vulnerable”.

Delving into financial abuse, the training includes:

• the changes to guarantors and co-borrowers and the new rules regarding how they should be treated under the Banking Code of Practice;
• what constitutes “substantial benefit” (e.g. an equitable interest in the asset or payment of debts);
• what brokers need to understand around guarantor protections;
• the new broker confirmation details; and
• how to identify the potential signs of financial abuse and examples of it (such as an applicant appearing withdrawn or only one applicant communicating with the broker).

These examples and tools have been drawn from a range of sources, including the content that the banks have put their own staff through as part of the new banking code bank training and Lifeline resources around identifying signs of financial abuse.

Consistent and recognised regardless of which association a broker has membership of, the standardised training means that brokers can undertake their member association’s training, which will be recognised by ABA member lenders. 

This will negate the need for brokers to complete training through each individual member.

Brokers will be required to complete the program in the coming months and as an online refresher course every two years, in line with other professional membership requirements of the MFAA and FBAA (such as AML/CTF training).

The assessment requires an 80 per cent pass rate.

It is hoped that training will help mortgage brokers:

• Understand the Banking Code of Practice and who it is designed to benefit
• Understand the code’s obligations and a broker’s responsibilities in relation to co-borrowers and guarantors
• Recognise the circumstances where customers may experience vulnerability
• Be better able to identify potential financial abuse

In a joint statement, the ABA, FBAA and MFAA commented: “The royal commission highlighted the importance of treating vulnerable customers with extra care. 

“The training module will help brokers contribute more meaningfully to this effort by providing them with information about the banking code and guidance to help them identify potential financial abuse more effectively.”

MFAA members

The MFAA will be rolling out the education module and a short assessment to brokers on a staggered basis.

MFAA members are being advised that they will be notified by email when the module is available for them to complete.

MFAA members will be able to access the e-learning program through the MFAA learning management system, which will take brokers through the content and culminate in a 15-question assessment.

It is estimated that the training could take around 30 minutes, after which members will be issued with a certificate, which lenders may in due course request sight of.

The MFAA has told broker members that while the module will be offered to members at no charge, there will be a nominal charge applicable for administration and ongoing updating of the course material in future.

The association added that it will be expanding its financial abuse training more broadly to include other areas of vulnerability “in due course”.

“The MFAA is fully supportive of the objectives of the Banking Code of Practice that came into effect on 1 July this year,” the association said. 

“We acknowledge the critical role brokers can and must play in recognising customers in vulnerable circumstances and treating them with sensitivity, respect, compassion and the extra care they deserve.”

FBAA members

The FBAA said it will go live with the new training module from today.

A special notice will go out to broker members this week, which will include a link to the e-learning module available through the FBAA website.

Once FBAA members have completed the online training, they will receive an email notice confirming they have passed. A formal certificate will not be issued.

The FBAA said it expects all members to have completed the training within the next two months.

The FBAA managing director commented: “I’m grateful to the ABA for being open and negotiable around the whole financial abuse declaration process we have been through. They were open to discuss it and we all worked together as an industry for an outcome that was appropriate.”

[Related: Common approach agreed on financial abuse requirements]