Referral of Business
When referring business, you and the referrer must comply with the National Consumer Credit Protection Act 2009 (NCCP Act). The NCCP Act requirements are summarised below.
Referrers - NCCP requirements for referrers:
- The referrer is only informing the consumer that the broker is able to provide the service and provides the broker with the consumer's name, contact details and a short description of the purpose for which the consumer may want the credit (if known);
- The referrer is not banned from engaging in credit activities;
- The referrer does not charge the consumer a fee;
- The consumer has consented to the referrer giving the consumer's name to the broker;
- The referrer must give the information to the broker within five business days after informing the consumer that the broker is able to provide the service;
- The referrer must not conduct business by contacting people face-to-face from non-standard business premises (e.g. a stall in a shopping mall or airport such as credit card providers sometimes do); and
- The referrer discloses to the consumer any benefits that may be received by the referrer, including commission.
Brokers - NCCP requirements for referrals received:
- The broker must contact the consumer within 10 business days of receiving the referral;
- When the broker contacts the consumer they must ensure in the initial discussion:
- that they advise they have been referred their details by the referrer;
- they confirm that the consumer is happy to proceed with the discussion; and
- that a payment of a referral commission is due if the loan settles (if applicable).
Section 31 of the NCCP Act prohibits licensees from engaging in a credit activity with another person who is unlicensed. The penalties imposed are significant; therefore you need to ensure that you’re compliant.
The NCCP Act requires that there be a written agreement with a referrer, regardless of whether a commission is paid. In order for Loan Market to make payments to third party referrers on your behalf, your referrer will need to have and maintain a valid ABN.
Loan Market will only allow a referrer to share in trail commission if they have an ongoing financial relationship with the client, e.g. a financial planner or accountant. The maximum commission percentage that Loan Market will pass through on your behalf is either 50% of the upfront with nil trail, or 30% of the upfront and 30% of the trail (where a referrer qualifies for trail commission payment).
It’s also important to note that a referral agreement is not appropriate for a credit representative to refer to another credit representative. When the agreement is to be held between parties who are both credit representatives or holders of credit licences, a commercial agreement, rather than a referral agreement is required.
It’s important to be aware that payments made to your referrers are done so on your behalf. Therefore, if a referrer’s account falls into arrears (due to a clawback, etc.) and we are unable to recoup the money from the referrer directly, the broker will be responsible for any outstanding amounts.
Referral agreements can be requested via MyCRM, by selecting the “New Agreement” button and completing the referral agreement request form. The referral agreement will then be prepared and emailed to the broker and referrer to complete and sign electronically. Once completed, all parties will receive a copy of the completed agreement for their records and systems will be set up to reflect the agreement accordingly.
All agreements are also subject to Loan Market approval.
If you have any questions, please contact firstname.lastname@example.org