Reasonable inquiries under the NCCP: what a broker's file note has to show

What the provisions actually say

The responsible lending obligations are in Chapter 3 of the NCCP Act. Brokers (credit assistance providers) sit in Part 3-1. Lenders (credit providers) sit in Part 3-2. The obligations mirror each other, because the broker and the lender each make their own assessment.

Two details trip people up. First, the 90-day window. ASIC notes that the longer 120-day period for home loans in reg 28J of the National Credit Regulations applies only to credit providers (RG 209.44). For a broker, it is 90 days. If a deal stalls and you pick it up four months later, the inquiries need refreshing and the note needs a new date. Second, the broker's assessment is "preliminary", but that does not reduce the inquiry and verification standard for the information a broker can access (RG 209.118).

The 2020 repeal attempt did not pass

In September 2020 the then federal government announced it would remove most responsible lending obligations from the NCCP Act, keeping them only for small amount credit contracts and consumer leases. The National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020 was introduced in December 2020. A Senate committee recommended it pass in 2021, but it did not have the crossbench votes to get through the Senate, and it lapsed when Parliament was dissolved in April 2022 ahead of the federal election.

Some older articles still describe responsible lending as "scrapped". It was not. Sections 115 to 118 apply to brokers today, and the best interests duty sits on top of them.

How the best interests duty sits on top

Since 1 January 2021, s 158LA has required a licensee providing credit assistance on a home loan to act in the best interests of the client, and s 158LB requires them to prioritise the client's interests where there is a conflict. ASIC's guidance is RG 273. There is no safe harbour list of steps, unlike the financial advice duty in s 961B of the Corporations Act.

The practical difference: responsible lending asks whether a loan is not unsuitable. BID asks whether the loan you recommended, from the options available, was in the client's best interests. A loan can pass the first test and fail the second. Your s 117 inquiries feed both, but the BID record also needs the options you considered and why you picked the one you did. We cover that in best interests duty file notes for brokers and RG 273 explained.

Inquiry 1: requirements and objectives (s 117(1)(a))

RG 209.51 lists the information you are likely to need: the amount of credit or maximum limit, the timeframe, the purpose, any features the client wants (and how important each is, and whether they will pay more for it), and whether extra costs such as insurance premiums are being financed. RG 209.52 says it must be specific enough to show what matters to the client. In ASIC v The Cash Store [2014] FCA 926, the Federal Court found that descriptions like "personal" or "living expenses" were not enough.

ASIC also says it may be reasonable for brokers to make more detailed requirements and objectives inquiries than a lender, because helping the client choose between lenders and products is part of the broker's service (RG 209.120). For a refinance, RG 209.241 to RG 209.243 add more: details of the current loan (rate and fees), repayment history, and whether the switch produces an overall saving after all costs or better meets the client's needs.

Inquiry 2: financial situation (s 117(1)(b))

The information should let you understand whether the client can meet the new repayments without substantial hardship, and whether the loan is only affordable if they cut spending they are not willing to cut (RG 209.58). For income, ASIC expects the amount, frequency and source, and any foreseeable changes. One pay period is not enough (RG 209.61 to RG 209.62). RG 209.64 gives the examples brokers see most: a client who will still be paying the loan after retirement age, and income with a known end date during the loan term.

Expenses and liabilities matter just as much. Ask about every existing debt, including credit card limits, buy now pay later, HECS-HELP, and any guarantees. If the client says they will close a card or cut an expense to make the numbers work, that becomes a commitment you record (RG 209.261(d)).

Step 3: verification (s 117(1)(c))

Verification means checking that the information is true. ASIC says it is not sufficient to rely only on the client providing true information (RG 209.50). Brokers can have regard to what the chosen lender requires, but must still be satisfied the information is enough for their own assessment (RG 209.121). Typical sources for a PAYG client: recent payslips, an employment letter where there is a probation period, bank statements, and existing loan and card statements. Self-employed clients: tax returns and notices of assessment, BAS, and accountant letters.

ASIC's Example 27 in RG 209 is worth reading. A broker asked the client whether they had other liabilities or unpaid bills, recorded the answer, and reviewed bank statements. When the lender later found unpaid utility bills on a credit report, ASIC said the broker had not failed their obligations, because it was reasonable to rely on the client's answer where nothing in the statements suggested otherwise. The recorded answer is what protected the broker.

Where HEM fits

The Household Expenditure Measure (HEM), published by the Melbourne Institute, is a benchmark. It tells you nothing about the individual client (RG 209.136, quoting ASIC v Channic Pty Ltd (No 4) [2016] FCA 1174, where the benchmark was described as "a substitute" for making inquiries). ASIC says benchmarks are useful to test whether declared living costs are plausible, to estimate costs a client does not have yet (a FHB moving out of home), and to test whether proposed spending cuts are realistic (RG 209.138). A note that says "HEM used" with no declared expenses is the classic gap.

What the file note must show for each inquiry

RG 209.265 is blunt: failing to record the inquiries, verification steps and information you relied on makes it hard to show you complied. RG 209.270 says keeping file notes in one place helps explain what you did and why it was reasonable. RG 209.272 suggests a short narrative summary that "connects the dots" between the fact find answers and the product chosen.

RG 209.268 adds a practical point for fact finds: answer every question, even if the answer is "nil" or "N/A". A blank field reads as a question that was never asked. Our NCCP file note compliance checklist turns this table into a tick-list you can run over a file.

Worked example: a refinance file note

Here is a fictional client meeting and the note a broker would make from it. The names and numbers are invented.

Notice what makes this defensible. The objective (offset) is specific and ranked. The client's own expense figure was used because it was higher than HEM. Priya's future pay rise was noted but left out of servicing. Each verified figure names its document. The refi benefit is stated after costs. And the preliminary assessment has a date and a period, which ties back to the 90-day rule in s 115. For more on structure, see how to write a compliant NCCP file note or our mortgage broker file note template.

Common audit failures

These are the gaps that come up again and again in aggregator and licensee file reviews, and they map directly onto the provisions above.

• Generic objectives. "Client wants a better rate" or "purchase" with no features, priorities or timeframe. RG 209.52 and the Cash Store decision say this is not enough.
• Expenses at exactly HEM. Declared living costs that match the benchmark to the dollar, with no note on how they were collected. RG 209.140(e) flags this pattern as a sign inquiries are not working.
• Verification not recorded. Documents are on file but the note never says what they confirmed, or the dates show they were collected after lodgement.
• Stale assessments. The preliminary assessment is older than 90 days when the application goes in, or has no date at all.
• Refi with no cost comparison. No record of discharge, application or break costs, so there is no evidence the switch benefits the client (RG 209.242).
• Blank fact find fields. Questions left empty rather than marked nil or N/A (RG 209.268).
• Foreseeable changes ignored. A client who is 52 on a 30-year term with no note on retirement plans and exit strategy (RG 209.64(a)).
• No BID reasoning. The responsible lending file is complete, but nothing explains why this lender and product over the alternatives.

If you want to test a sample of your own files against these, our file note audit readiness checker and the mortgage broker compliance audit checklist are a good place to start.

Getting the note written while the call is fresh

Most of the gaps above happen because the note is written two days later from memory, and the specifics (the rank of the offset, the retirement plan, the spending the client said they would cut) are gone. CallNote turns a transcript of the client call into a structured file note in about two minutes, using the NCCP template or your own format. It never records the call. It works from a transcript you already have, pasted, uploaded from Teams or Zoom, or received automatically from Aircall or Dialpad. You review the note, then publish it seals it with a timestamp and audit trail. See how it works for mortgage brokers.

Common questions