Preparing for BID - Needs and Objectives
Updated
by
Caroline Pollard
This week we look at the 'Needs and objectives' tab in Chief to help prepare you for the introduction of Best Interests Duty (BID) on 1 January 2021.
As part of your Responsible Lending obligations (under RG 209.43), you must make reasonable inquiries about your client's financial situation, requirements and objectives. Although the Responsible Lending obligations and BID are distinct obligations (as stated in RG 273.22), the information gathered for the purpose of Responsible Lending may help you to determine what is in your client's best interests.
In order to make your recommendation, you must complete the following sections in the 'Needs and objectives' tab:
· Needs and objectives
· Requirements and objectives
· Possible adverse changes to financial situation
· Possible beneficial changes to financial situation
· Exit strategy
· Your financial security
· Your credit history
What's changing in Chief?
Chief has already been enhanced throughout 2020 in preparation for BID, with the completion of all sections in the 'Needs and objectives' tab to be made mandatory next month.
As per RG 273.45, in order to meet the BID you will need to understand your client's needs, goals and financial situation. The information captured within the 'Needs and Objectives' tab will continue to populate information into the 'Credit Proposal & Preliminary Assessment', supporting your recommendation. Further enhancements in Chief will ensure that the disclosure documents represent the full assessment that has been made into the client's requirements and objectives and will provide more clarity on the reason for product selection.
It is also important that all information provided is accurate and complete. RG 273.42 states that a Mortgage Broker who provides incomplete or inaccurate information will fail their BID obligations, even if the inaccurate information would increase the likelihood of approval or give your client access to better terms.
