C.08 Compliance - Living Expenses
Fact Find - Living Expenses
Premium Brokers need to be very vigilant with regards to LIVING EXPENSES. As a licensee, Premium Broker has some specific policies and tools to assist in assessing client's Living Expenses.
Post Settlement Analysis It is a Premium Broker policy to assess LIVING EXPENSES in a post settlement situation. This means the client needs to assess their living expenses assuming the loan has settled. For example a young couple living at home will probably not have any council and or strata fees payable. However if they were to purchase a new owner occupied unit they will have to pay council & strata fees.
Expenses Categories Brokers are asked to complete all Categories to assist in calculating total living expenses. These living expenses are itemised within VowNet and should be completed as accurately as possible.
COLLATE - Client Assessment The client should be asked to complete their own living expenses in a post settlement environment. This assessment can be either with the use of detailed spreadsheet, online survey, interview with the client or via the FactFind software.
ANALYSE - Broker Assessment Once the client has completed there assessment the broker should review the living expenses and check to see if they are reasonable. Brokers should look for obvious low figures and use common sense to question the reality of these. If the client has provided bank statements they should be checked for accuracy. Software used to scrap a clients expenses can also be referred to. If a broker amends the client's assessment it should be noted in a file note or within VowNet.
DOCUMENT - Broker's Notes & VowNet It is recommended that a broker always make detailed comments about a clients declared living expense in as detailed as possible. Comments can be entered in the Compliance section of VowNet:
1. Living Expenses Description
2. Living Expenses Comments
3. Living Expenses Verification
Living Expenses Declaration
Whilst not required, broker's have the ability to provide clients with a copy of their living expenses by creating a document called "0.PB Living Expenses"
HINT - Lenders and Aggregators continuously monitor your loans and specific the amount/percentage of loans that are below HEM levels. HINT - Work out what the HEM figure is for the lender you are using. If the clients assessment is lower you should make notes as to why and in some case increase to meet HEM with appropriate file notes.