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Lesley BurvillHead of Risk
Looking at the approach of
Credit Unions and
Responsible Lending
Exploring the best practice of
leading Credit Unions and their
approach to responsible lending
About Community First Credit Union…
• Established in 1959, Community First is Sydney’s largest
community based Credit Union
• $940 million in assets under management.
• 55,000 Members.
• Staff challenging stereotypes and offering standards of
service superior than our competitors.
• 15 Financial Services Stores in locations stretching from
Newcastle to Campbelltown and now the Northern Beaches
and growing every year.
About Community First Credit Union
Continued
Members enjoy a full retail product range:
• on-call and Term Deposits (up to 3 years)
• Credit cards, Personal loans (including Green loans),
Home loans (P and I or I only), small business loans
• Access accounts and cards, internet and mobile
banking, self help and staff assisted service options.
Who is Community First?: Our Brands
Powered by Community First Credit Union Limited ABN 80 087 649 938
Mission:
“…help members achieve their financial goals by building relationships for mutual benefit.
Community First uses three brands
in order to promote different value
propositions to two very different
market segments.
RG 209.32Reasonable inquiries about a consumer’s financial situation will
generally include:
• the consumer’s current amount and source of income or benefits
(this would include the nature and length of their employment—for
example, full-time, part-time, casual or self-employed—and whether
all or part of the consumer’s income is sourced from payments
under the Social Security Act 1991);
• the extent of the consumer’s fixed expenses (such as rent,
repayment of existing debts, child support and recurring expenses
such as insurance); and
• the consumer’s variable living expenses (such as food and utilities)
and drivers of variable expenses, such as dependants and any
particular or unusual circumstances.
5C’s of Credit
• Conditions
• Character
• Capacity
• Capital
• Collateral
Requirements and Objectives
• Type of finance
• Primary purpose
• Features
• Flexibility
Example Mr and Mrs Smith
• $30 000 for a caravan
• Repayments less than $500 per month
• Offered security
• Not Unsuitable
• Our Product offering (some alternatives)
• Unconscionable?
Loan type Loan amount $ Monthly Repayment (rounded)
Term in years Total interest charge (rounded)
Personal Loan
30 000 690 5 11 400
Mortgage top up
30 000 185 26 27020
Mortgage split
30 000 490 6 5390
Mortgage split
30 000 450 7 6330
3 yr Fixed Mortgage Split
30000 460 pm for 3 years followed by 490 for 3 years
6 5460
Overdraft versus Credit Card
• Interest rates
• Offset accounts
• Self discipline
• Needs analysis
Debt consolidation
• True debt consolidation rare at Community First
• Small credit card maximum limits compared to
the majors
• Personal service - high touch model
This can be grouped into the following;
Fixed Expenses
Rent/Board
Child Support
Insurance
Repayment of Existing Debts
Variable Expenses
Entertainment
Food & Utilities
Dependants
LIXI categories of Living Expenses
• Basic Housing & Property Expenses (Inc. Utilities)
• Groceries
• Communications
• Recreation & Entertainment
• Transport
• Insurance
• Child care and Education
• Clothing and personal care
• Other
Any Questions?