Credit guide, quote and credit proposal disclosure: the NCCP rules for brokers

The three documents at a glance

Each of these obligations is a civil penalty provision. A breach of the credit guide obligation in s 113(1) is also a strict liability offence (s 113(5)).

The credit guide (s 113)

Timing

Section 113(1) says the licensee must give its credit guide 'as soon as practicable after it becomes apparent to the licensee that it is likely to provide credit assistance' to the consumer. For most brokers that is the first real conversation about a loan, so the credit guide goes out with the welcome email or fact find. If a credit representative gives the licensee's guide, s 158 requires the rep to give their own credit guide at the same time. Reg 28L(9) allows the two to be combined in one document if every other requirement is met.

Content

Under s 113(2), the licensee's credit guide must:

• Be in writing and give the licensee's name, contact details and Australian credit licence number.
• Describe any fees and charges payable by the client to the licensee, and how they are worked out.
• Name the lenders the licensee deals with: all of them if 6 or fewer, otherwise the 6 it reasonably believes it does the most business with.
• Describe commissions (indirect remuneration) the licensee, its employees, directors or credit reps are likely to receive from lenders, with a reasonable estimate or range and the method for working them out.
• Explain the internal dispute resolution procedure and give contact details for the AFCA scheme.
• Explain the licensee's obligations under s 120 (giving a copy of the preliminary assessment on request) and s 123 (not suggesting or assisting with unsuitable contracts).

Reg 26A adds two things: the guide must say if commissions are likely to be paid to third parties for referrals, and, for each lender with a volume bonus arrangement, that the arrangement exists and the licensee may receive extra remuneration depending on volume. Reg 27 lets the guide leave out the fee method and commission estimates if it says the client can ask for them and the licensee can provide them on request. Reg 28B allows updated information to be left out for up to 93 days, except AFCA contact details.

The quote for credit assistance (s 114)

Under s 114(1), a licensee must not recommend or help with a particular loan, a limit increase or staying in a loan unless it has given a written quote, the client has signed and dated it or otherwise accepted it, and the client has a copy of the accepted quote.

The quote must state the maximum amount payable by the client to the licensee, broken into the licensee's fee, its charges and any amounts paid to others on the client's behalf, and say whether anything is payable if the loan does not proceed (s 114(2)). Reg 28D requires each fee to be explained, in dollars where known, and clearly identified as a quote. The licensee cannot then ask for more than the quoted maximum (s 114(4)), ask for payment before the assistance is given (s 114(5)), or lodge or threaten a caveat to get paid (s 114(6)).

The no-fee exemption

Commission-only brokers usually give no quote. That relies on Reg 28M and Schedule 4 of the Regulations, which modify s 114 so no quote is needed in the circumstances in Reg 28C: the credit guide states that the licensee does not charge fees or charges for credit assistance, or the licensee does not intend to charge a fee before providing the assistance and the CPD states that no fee or charge was imposed. Schedule 4 also adds s 114(4A): if no quote was given, the licensee must not ask for payment for its credit assistance. If you ever charge the client a fee, check with your licensee before relying on the exemption.

The credit proposal disclosure document (s 121)

Timing

Section 121(1) requires the CPD to be given 'at the same time as' the licensee suggests or assists the client to apply for a particular loan with a particular lender, or suggests an increase or that they stay in a loan. In practice the CPD goes out with the recommendation, before the application is lodged. A CPD dated after lodgement shows on its face that it came after the assistance.

Content

Under s 121(2), the CPD must contain:

1. The total fees and charges the client is liable to pay the licensee for the loan, and how that amount was worked out.
2. A reasonable estimate of the total commission the licensee, or an employee, director or credit rep, is likely to receive for the loan, and the method.
3. A reasonable estimate of the fees and charges payable to the lender to apply for the loan.
4. A reasonable estimate of the fees and charges payable to anyone else to apply for the loan.
5. If any of those amounts are paid out of the loan, a reasonable estimate of the credit left available to the client after they are paid.

Reg 28E requires each fee to be named, explained and costed in dollars (or as a proportion or percentage with a dollar amount), and the CPD must clearly state that the client will be liable to pay them. Reg 28G requires each kind of commission to be described separately, with who pays it, who receives it and a dollar estimate, plus a total for the licensee and for the credit rep. It also requires disclosure of referral payments to third parties (the Regulations give a real estate agent as the example) and a reasonable estimate of the maximum commission likely from any volume bonus arrangement. For trail paid in instalments, Reg 28H(5) allows a reasonable estimate of the highest instalment instead of every amount, on stated assumptions.

Reg 28F saves some repetition: if a fee was already disclosed in a quote given no more than 30 days earlier and the amount has not changed, the CPD can show the fee and refer the client to the quote for the detail.

Timing in the life of a loan

The best interests duty sits over all of this. Section 158LA requires a licensee that is a mortgage broker to act in the client's best interests in relation to the credit assistance, and s 158LE puts the same duty on a credit representative acting within their authority. ASIC's RG 273 is the guidance. The CPD shows what you will be paid. The file note shows why the loan you chose was still right for the client. See mortgage broker best interests duty file notes.

Giving the documents electronically

Reg 28L sets the manner for all three documents. Electronic delivery needs the client's consent, and before they consent they must be told that paper may no longer be given, that they need to check electronic communications regularly, and that they can withdraw consent at any time (Reg 28L(4)). Documents must be saveable and printable. If a document is not handed over personally, you must be reasonably satisfied the client received it before doing further credit activities. Under Reg 28L(8), a document properly addressed and sent, including by email, counts unless the client tells you otherwise. A credit guide on a portal counts once the client tells you they accessed it.

How to prove each document was given

An auditor, AFCA or ASIC will ask two questions of each document: was it given, and was it given in time. A template line saying 'docs issued' answers neither.

• Keep the exact version sent. Save the PDF that went to the client. Credit guides change when your lender panel or fees change, so a link to the current template proves nothing.
• Keep the delivery record. The sent email with attachment, the portal access log or the e-sign audit trail. E-sign logs are strong evidence of the quote acceptance s 114(1)(e) requires.
• Record consent to electronic delivery, and that the Reg 28L(4) warnings were given.
• Date the CPD against the recommendation. The file note of the recommendation call and the CPD should carry the same day, and both should predate lodgement.
• Note the conversation. One line that you walked the client through the CPD, including commission and any referral payment, and what they asked.
• Keep it for at least 7 years. Section 120 lets the client ask for the preliminary assessment within 7 years of the quote date, and your disclosure file goes with it.

Disclosure checklist for every loan file

Common misses: a CPD generated at lodgement days after the phone recommendation, an old credit guide still attached to the welcome email, the rep's guide missing, volume bonus or referral payments left off the CPD, and a no-fee exemption relied on while charging an occasional fee. For the full audit list, use the mortgage broker compliance audit checklist and the interactive NCCP file note compliance checklist.

Worked example file note

Invented clients, lender and figures.

Each document is tied to a date and delivery method, the CPD went out with the recommendation and before lodgement, and the commission conversation is recorded. That is what a reviewer looks for.

Making the file note on the day

The disclosure documents come out of your CRM. The file note of the recommendation call is what gets left for Friday. If the call ran through Aircall or Dialpad, or you have a Teams or Zoom transcript, CallNote turns the transcript into a structured NCCP file note in your own format in about two minutes. It never records calls and never joins a meeting. You review it, then publish it, so the note is sealed with a checksum and any later change shows as a dated amendment. There is no native broker CRM integration, so the note goes across by copy and paste or PDF. See CallNote for mortgage brokers, or read how to write a compliant NCCP file note.

Common questions