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What does the National Consumer Credit Protection Act mean for me as a borrower?

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The National Consumer Credit Protection Act or NCCP for short is legislation designed to protect consumers & ensure ethical & professional standards in the finance industry through the National Credit Code (NCC).

The act is regulated & enforced by ASIC. A major part of the act is that all lenders & mortgage brokers are required to hold a credit license or be registered as an authorised credit representative.

Regulation has resulted in a lot more paperwork ensuring everything is recorded correctly and due diligence in making sure the finance is not unsuitable for my clients and is recorded as part of the interview process and client’s needs analysis.

I always took the time to ensure any loan or product I was offering my clients suited their circumstances so I have not had a lot of change personally as I always kept comprehensive diary notes outlining how I had come to conclusions and recommendations made.

Self employed clients who had been in a position to self certify their income have been affected as this is no longer possible under the legislation as we must determine that the client can afford the repayments and have supporting documentation verifying this to be covered by the new code.

Clients also can no longer take a loan over 30 years if they will be over 65-70 before the term ends assuming they do not have a clear exit strategy in place. That strategy must clear the housing loan by the time they retire and this may involve paying the loan off from the proceeds of superannuation or the sale of an investment property or shares.

The changes that the government has made help protect the clients ensuring they are not put in a situation of having a loan they cannot afford when they retire or by inflating their income in order to have the loan approved. 

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