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RG 206.47 – Experience gained under supervision and mentoring

By: admin|

Current practices have not seen effective and measured mentoring programmes implemented into the Finance Mortgage Industry mainly due to the busy and unsupervised practices of the past without having the proper required direction and enforcement from regulators. That is all about to change now from the 1/07/2010 when ASIC will take control of the consumer lending which has been run and controlled by different states regulations and now Australia will experience a truly national licensing regime. This will enable a fairer system that no longer has states boundaries preventing a finance broker from operating freely across the one country called Australia. unfortunately the first rollout only covers consumer lending and excludes car yards that lend for vehicles and business lending. These two will hopefully be brought under ASIC’s control in the future.

One of the most controversal issues facing Licence holders now is that the licensee must hold a licence and the Responsible Manager must have a minimum of two years experience to by the RM for the licence. The RM is also responsible for the mentoring of the representatives or support person. hence its a two years experience ASIC the regulator is requiring for the RM to carry out both of the above mentioned duties. Now lets look at the relevant sections of the regulation 206.

Reading RG206.47 clearly states  as follows;

 The objective of gaining experience as support person or representative is to acquire a good understanding of the processes necessary to independently manage a business undertaking those particular credit activities. This should be done on the express understanding that the support person or representative is being mentored by a responsible manager in the licensed business to gain relevant experience that will go towards assisting them to work independently in the industry.

  Reading RG 206.48 On reviewing your licence application, we may need to ask you for supporting documentation in order to check that your responsible managers have had two years problem free experience. The supporting documentation we ask you provide could be references from their previous supervisors within a credit business confirming their duties and length of time in the business and the role of the supervisor providing the reference.  

  RG 206.49  In some parts of the credit industry( e.g. the mortgage broking industry), the main providers of credit activities are sole traders who do not have employees. We recognise that in these circumstances it would be very difficult for entrants to the industry to gain necessary experience to become a responsible manager or a licensee, as there are few opportunities available for being employed to gain experience.

RG 206.50  In recognition of this, we will allow people who are currently being mentored according to the Mortgage and Finance Association of Australia (MFAA) mentoring guidelines( as current at date of publication of this regulatory guide to be responsible managers on the basis they will successfully complete their mentoring. This will be a transitional arrangement until 30 June 2012. After this date, we expect all new credit licensees providing mortgage broking services to gain two years of problem free experience working for the licensed mortgage brokers prior to seeking a credit licence in their own right.

FBAA and CAFBA also have a mentoring programme for their members and ASIC has stated that as long as the requirements meet the same/similar guidelines to the MFAA’s then that’s is okay as well. AAMC in fact can provide that solution as well for people that require that service as we also meet the MFAA outcomes required. One needs to question though the 4 years minimum requirement of the MFAA versus ASIC’s minimum 2 years requirements to be a mentor and perhaps the associations need ro resolve that situation with the regulator, who has stated that it is a minimum of two years as a RM.

 The way I read this is that if they have not started their mentoring programme by 1/7/2010 then they will not comply with the two years of transition that ASIC is talking about, unless of course they do comply past that point with two years trouble-free. The duties will still rest with the RM of the licence holders from 1/7/2010 and forever. The Real Estate Industry operates this way already in that you must work under licence holder for two years before you can apply for your own licence, plus they must also have completed their Diploma before they also apply for the licence. Most professions require a minimum education level of Diploma before they can obtain a licence and ASIC’s current requirements are certainly generous. It will be interesting to see how Professional Insurance companies go in providing insurance cover for an educated/qualified versus uneducated/unqualified writer.

Jeff Mazzini 

Managing director AAMC Training Group.

One thought on “RG 206.47 – Experience gained under supervision and mentoring

nccp act April 5, 2011, 6:10 am

RG206.47 is really good: even if we gain an experience or do mentoring then also we can learn many things from them. it satisfies the sentence “people learn from mistakes”. thanks

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