Reasonable inquiries - How do we define what a reasonable inquiry is?
With ASIC aggressively policing the NCCP Act, already we are seeing brokerages facing fines and reprimands for non-compliance. It is vital that all brokers are vigilant under NCCP, and the team at Connective Compliance are working hard to ensure our brokers have a better understanding of their responsibilities and obligations are under the act, assisting them to maintain in their business processes.
Two components of the Act are key for brokers’ obligations, ‘Reasonable Inquiries’ and ‘Reasonable Steps’.
So…How do we define what a reasonable inquiry is?
According to RG 209.3 – In undertaking the assessment, you must:
(a) make reasonable inquiries about both the consumer’s requirements and objectives and their financial situation; and
(b) take reasonable steps to verify the consumer’s financial situation.
Why would we not accept what the client says on face value?
As part of your due diligence, you must determine if the deal you have chosen for your client will be ‘not-unsuitable’ and in doing so as part of your own process, you must verify the client financially
How do we take reasonable steps to verify the clients financial situation?
As a suggestion you could do the following:
- Make further inquiries such as contact the employer to verify income and actual employment position
- Request originals of bank statements to confirm salary deposits, expenditure and confirmation of savings
- Request an original of a Tax Assessment Notice issued by the ATO to confirm previous year income
Should you require assistance in regards to Compliance please contact our Compliance Support Managers at firstname.lastname@example.org.