Using COSL Rules To Assess Complaint By Steven Shields

External Stakeholders

• Your business has 6 employees who have all been with the business for 3 years or more. 1 Business Development Manager, 3 loan writers, 1 support officer, 1 administration assistant.
• Premises are owned.
• Spare office space is limited in the current premises.
• Business borrowings:
  • Term loan $200,000
  • Overdraft    $20,000
• Procedure manuals completed when business first opened (never reviewed).
• Monthly workplace inspections are conducted.
• The business operates a company car that is leased.
• All computers are networked and basic virus protection is installed.
• Training of new staff and ongoing training is not well structured and is a bit “hit and miss”.
• Business insurance is current – including personal injury and property damage, fire, storm, malicious damage and other defined events, business vehicle insurance, business interruption, personal accident or illness.
• Audits have not been completed as regularly as needed due to Office Manager being too busy.
• A recent customer satisfaction survey showed excellent results, which has been very positive for the business with a high level of referrals being received.
• Business sponsors the local Under 10’s soccer team and has participated in Clean up Australia day for the last 5 years.
• Aged debtors and creditors listing shows some long overdue accounts.

Answer the following questions using the above scenario:

Please note: The answers provided should relate directly to the scenario and be in your own words to demonstrate your understanding (do not copy directly from the notes). The case study in the learners guide is there to assist in your completion of the assessment.

External Stakeholders	Internal Stakeholders
· Suppliers Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper · Customers · Local council · Society · competitors	· Employees · Owners

1. Identify at least 4 external and 3 internal influences:

External	Internal
	· Staff · Money · Company culture
· The economy · Competition · Technology · Politics · Customers and suppliers

1. List 5 key business drivers:

1. Cash
2. Profit
3. Assets
4. Growth
5. People

1. Complete a SWOT analysis (provide at least 4 points under each heading)

Strengths	Weaknesses
· Good working environment · Competent staff · High levels of referrals · Stable economy	· Limited office space · Limited staff · Non structured staff training ·
Opportunities	Threats
· More referrals / new customers · Operating another business ·  ·	· Ageing debtors · Audits that have not been completed · competition

1. To establish the risk management context provide information for the following steps:

1. Step 1–

Define the

1. organisation,

this is an organization that deals in mortgage broking business and has been in operation for the last five years. 

1. process of activity

mortgage loan prequalification-application of loan-processing and verification.

1. and establish its goals and objectives (use the table below to establish objectives).

Criteria	Objectives
Financial	To improve the company’s bottom line.
Operational	To be the most efficient company in terms of service delivery.
Health and safety	To protect the both the staff and society from health risks.
Compliance/Legal	To comply with the government laws.
Technological	To be most advanced in terms of technology.
Reputation	To be a reputed company in terms of delivering services.

1. Step 2– Specify the nature of the decisions that have to be made.

 Routine and operational decisions- This are the decisions that have to be made in regard to the operations of the business.

• Step 3– Define the extent of the project activity or function in terms of time and location.

The company has been in operation for over five years  and the project has come a long way to be fully established in this location.

Question 2 – Identify risks

1. a) List 7 risk identification tools that could be used in the formulation of the risk management plan and discuss reasons for selecting each tool.

Tool	Reasons
1	Risk probability and assessment of impact	It investigates the likelihood of the specific risks, cost , quality and performance.
2	Risk categorization	It is to determine the effects of uncertainty and common risk causes
3	Expert judgement	This is to ensure that risk facilitation workshops, with individual with experience in the project
4	Data gathering	Risk management plan is used in data collection and identification
5	interviewing	Interviewing economists on the way forward to determine the economic well-being of CFF
6	Risk categorization	It is categorizing risks so as to ensure that all risks are classified into their own way
7	Risk urgency assessment	Assessment of risk will be an essential tool in risk assessment of CFF

• All other risk categories at least tworisks/opportunities

Example of what is required 

A financial risk in the scenario could be that the increase in loans (due to the new development) does not continue because the other mortgage broker in the town attracts more clients.

Risk	Description	Impact of risk
Financial/economic	Expected increase in loans does not continue 2.expected increase in loans will not continue 3.Loan defaulting is minimized 4.Increased loan facilitation	Risk – CFF could have cash flow shortages because they have put on extra staff and the work is no longer there. Opportunity – CFF could utilise these extra staff to implement a new marketing campaign, carry out client retention or to develop new strategies to bring in more business and increase their sales again.
Operational	1.consulting and outsourcing services are important to CFF 2.Disruptive events in CFF 3.Operationalization of 4.	Risk – – CFF could have cash flow shortages because they have put on extra staff and the work is no longer there
Compliance/legal	1. consulting and outsourcing services are important to CFF 2.Disruptive events in CFF 3.Operationalization of legal issues in legal rights of the company	Risk- CFF could have cash flow shortages because they have put on extra staff and the work is no longer there. Opportunity – CFF could utilise these extra staff to implement a new marketing campaign, carry out client retention or to develop new strategies to bring in more business and increase their sales again.
Human	1.Expected increase in in human resource management 2.	Risk- human resource management, and risk of labour turnover.
Health & Safety	1.increased health and safety 2	Risk- CFF could have cash flow shortages because they have put on extra staff and the work is no longer there.
Reputation	1.expected risk of reputational damage 2	Risk- CFF could have cash flow shortages because they have put on extra staff and the work is no longer there.

1. a) From the risks identified in question 2b) complete a risk register for the following risk categories:

1. Financial/economic
2. Operational
3. Compliance/legal

What can happen?  – again relate it to the scenario

Look at what may or may not happen in the business

Eg  loans decrease

How can it happen

List how it might happen – eg the competitor may attract more loans from the new development to his business

Identify existing controls

What has CFF done to identify this risk?  Nothing/something?

Adequacy of existing controls?

Assess whether it is:

• not applicable (if there is no risk control in place)
• effective or
• ineffective

Use the following matrix to analyse the risks:

Likelihood
Rating	Expression	Attributes
A	Extremely Likely	The event will most probably occur under most circumstances
B	Likely	The event will probably occur under most circumstances
C	Possible	The event may occur under certain circumstances
D	Unlikely	The event is unlikely to occur
E	Rare	The event will only occur under most exceptional circumstances

Negative Consequence
Rating	Expression	Attributes
1	Insignificant	Very minor impact or cost to the business
2	Minor	Minor cost, up to $5,000
3	Moderate	Moderate Impact or cost, up to $30,000
4	Major	Significant impact on the business, over $30,000
5	Disastrous	Possibly fatal impact to the business.
OR
Positive Consequence
Rating	Expression	Attributes
1	Insignificant	Small benefit, low financial gain
2	Minor	Minor improvement to image, some financial gain
3	Moderate	Some enhancement to reputation, high financial gain
4	Major	Enhanced reputation, major financial gain
5	Significant	Significantly enhanced reputation, high financial gain

 

L: Low Risk	manage by routine procedures
M: Moderate Risk	responsibility must be specified
S: Significant Risk	management attention needed
H: High Risk	immediate action needed

OR

L: Low Opportunity	manage by routine procedures
M: Moderate Opportunity	manage by specific monitoring or response procedures
S: Significant Opportunity	management attention needed
H: High Opportunity	detailed planning required to prepare for and capture the opportunity

Likelihood	A	S	S	H	H	H
B	M	S	S	H	H
C	L	M	S	S	H
D	L	L	M	S	H
E	L	L	M	S	S
	1	2	3	4	5
		Consequence

Function/Activity:		Compiled by:		Date:
Date of risk review:		Reviewed by:		Date:

Reference	The risk:	Identify existing controls	Adequacy of existing controls	Consequence rating	Likelihood rating	Level of risk	Risk Priority
What can happen	How it can happen
Financial /Economic	Loans/ mortgage default	Due to the economic condition in the country, customers may default the loans	CFF as a lender has put in place measures to evaluate the credit worthiness of a customer	Effective	3Moderate	C	3	M
Operational	Internal fraud	This may happen when some of the employees collude within	The company conducts internal audits	Ineffective	4(MAJOR)	B	5	H
Compliance /Legal	Reputational risk	This  may happen when CFF operates its business in a non ethical manner.	The company has put in place measures that ensure that the customer is served well and professionally.	Effective	3 Positive consequence	D	2	M

Extract of Risk Treatment Plan

Function/activity:
Risk Treatment Plan	Monitor & Review
Risk reference	Treatment strategy	Resources required	Responsible person	Timing	Monitoring requirements	Review completion date	Measures of success	Results	Options for improvement
Financial risk	Creating financial risk mitigation strategies	finances	Financial risk manager	One year	Financial statements	12.12.2017	Profit or loss	Profits	Creating financial risk management strategy
Operational risk	Setting systems that increase efficiency	Money , Time and a good system	Operational manager	One year	Operational and control systems	12.12.2017	Operational efficiency	Increased efficiency	Increasing the efficiency
Compliance/ legal risk	Creating internal controls that ensure that there is compliance	Having a constitutional and memorandums of association for legal purposes	Compliance manager	One year	The memorandums , articles and constitution	12.12.2017	Compliance rate	Reliance on good legal framework	Creating an elaborate internal control system
Reputation	Creating a good name	Money and time	Legal officer	One year	Controls and operational systems	12.12.2017	Profit or loss	Increased profits	Reputational risk and creating a brand
Health and Safety	Making sure that safety standards are followed and the entire system is healthy	Money and Time	Security officer	One year	Controls and operational systems	12.12.2017	Safety and security standards	Increased security	Safety improvement

Complied by:

Date:

Reviewed by:

Date:

COMMUNICATION PLAN

Purpose

Who Detail the relevant audiences, include internal and external stakeholders	What What information needs to be communicated.	How Communication method/s to be used.	When Ensure timing is accurate and specific for each step in the risk management process.	Responsibility Who has accountability and responsibility for each task?
Management	System overview,implementation scope, risk, reports, budget, rollout training, strategies and timetables	Meetings; demos and formal paper based reports.	As required	Project lead;implementation team
Staff/ employees	Responsibilities, risks , issue resolutions, strategies	Emails, meetings, bulletin board and work shops.	Weekly( for status meeting)	Implementation team leads ( internal and external)
Customers	Goals and objectives, business processes	Emails, advertisements	All stages	Payment plans
suppliers	Responsibilities, risks , issue resolutions, strategies	Meetings; demos and formal paper based reports	All stages	Implementation team leads ( internal and external)
customer	Goals and objectives, business processes	Meetings; demos and formal paper based reports.	All stages	Implementation team leads ( internal and external)
Society	Responsibilities, risks , issue resolutions, strategies	Meetings; demos and formal paper based reports.	All stages	Payment plans
Owner	Goals and objectives, business processes	Payment plans	v All stage	Payment plans
Society	Responsibilities, risks , issue resolutions, strategies	Payment plans	All stages	Implementation team leads

You are a mortgage broker at Thistown Brokers, Thistown.  You do not hold an Australian Financial Services (AFS) Licence.  A prospective client calls into the office to discuss his financial requirements.  Adam Brody (the client) is interested in purchasing a house in Thistown Heights.  Adam recently sold his unit and will be living in the new property with his girlfriend Rachel and dog Penny Lane.  The property will be purchased in Adam’s name only.  He has $150,000 deposit towards the purchase and is seeking to borrow $400,000 to $450,000.

Adam works as a Sales Manager and earns $120,000 per annum.  His fortnightly pay is deposited direct to his transaction account.  Adam is seeking a flexible product that does not have a fixed interest rate.  Under the FSRA a loan is not classified as a financial product. 

After clarifying Adam’s situation and eligibility you have decided to recommend a standard variable loan with FEDBANK.  You outline the features and benefits of the product to him, including the redraw facility.  After considering these, Adam advises that he often has surplus funds in his transaction account, however would prefer not to deposit these to the loan account in case he needs the funds for other purposes.  He often has a balance of $10,000 or more in the account.  You consider that an offset instead of a savings account (classified as a financial product under FSRA) option would suit his needs.  

1. From the above scenario outline in point form Adam’s objectives and goals with regard to his product requirements.

• Adam wants to invest and wait for capital growth of the house
• He seeks a flexible product that does not have fixed interest rate.
• He wants a redraw facility instead of a savings facility.

1. Adam has requested information about the offset option.  Under the FSRA how will you respond to this request.

• His financial situation must be verified.
• Advice him if the credit he is seeking is suitable for him.

1. Adam has asked you to explain the redraw facility.  Are you allowed to provide the information?  Why or why not?

Yes, I am allowed to provide the information.Because this facility comes with additional fees for deposits and withdrawals.

1. Research and list two key benefits of Home and Contents insurance. If Adam requests this information are you allowed to outline these key benefits to him?

Yes, if he requests this information you are allowed to provide this information which is; it saves for you in thefollowing ways get up to 30% no claim bonus discount and reduce your premium by varying your excess.

1. Although Adam’s job is fairly secure, he does worry about uncertainty in the financial markets and the economy and has sought some information about mortgage protection insurance.  What do you tell him?

In case he defaults on the mortgage , he is protected and also covers the cost of monthly mortgage repayments incase of death , job loss or when he is seriously ill.

1. The qualified specialist (Tier 2) is not in the office to complete the paperwork for Adam’s Home and Content insurance. Advise two methods the specialist can use to contact Adam to gather his personal and financial details for the paperwork.

• Australian Financial security Authority
• Australian Security and Investment Commission(Eliot, 2016).

In order to complete this question you will need to visit the website for Credit Ombudsman Services Limited (“COSL”).

Steven Shields calls Hopetown Brokers and speaks to John Grey (Complaints contact person).  Steven has received a letter from Fedbank over a loan application lodged in his name via broker Pauline Peters.  He advises John that he has never visited or met with Pauline, nor has he lodged a loan application with Hopetown Brokers. Steven, however, feels that John did not deal with his complaint adequately.

Hopetown Brokers is a COSL member. Steven has tried to resolve the matter with Hopetown Brokers, but is still dissatisfied to the point where he is seeking disciplinary action be taken against Pauline.

Using the COSL Rules (www.cosl.com.au), ascertain if COSL would handle Steven’s complaint and the reason(s) why or why not.

Using the COSL Rules, COSL would be able to handle Stevens complaints as they loan were done by a broker. Hopetown brokers filed and lodged a loan for him. When he talked to John Grey, the complaints contact person, he lodges the complaint. This is because Steven received a letter from Fedbank over a loan application that was lodged in his name via a broker known a Pauline. He has never met or visited the broker. COSL, should crack the whip on rogue brokers who are acting on principals without consultation. COSL will first launch investigations on the application that was  lodged and if Stevens was consulted, if not then COSL should use its rules to handle Stevens complaints as a regulator. It should also punish the Pauline Peters.

References

Acharya, V. (2011). Guaranteed to fail. Princeton: Princeton University Press.

Eliot, G. (2016). The mill on the Floss. New York: Open Road Integrated Media.

Retsinas, N. and Belsky, E. (2011). Moving forward. Cambridge, Mass.: Joint Center for Housing Studies, Harvard University.