Lesley BurvillHead of Risk

Looking at the approach of

Credit Unions and

Responsible Lending

Exploring the best practice of

leading Credit Unions and their

approach to responsible lending

About Community First Credit Union…

• Established in 1959, Community First is Sydney’s largest

community based Credit Union

• $940 million in assets under management.

• 55,000 Members.

• Staff challenging stereotypes and offering standards of

service superior than our competitors.

• 15 Financial Services Stores in locations stretching from

Newcastle to Campbelltown and now the Northern Beaches

and growing every year.

About Community First Credit Union

Continued

Members enjoy a full retail product range:

• on-call and Term Deposits (up to 3 years)

• Credit cards, Personal loans (including Green loans),

Home loans (P and I or I only), small business loans

• Access accounts and cards, internet and mobile

banking, self help and staff assisted service options.

Who is Community First?: Our Brands

Powered by Community First Credit Union Limited ABN 80 087 649 938

Mission:

“…help members achieve their financial goals by building relationships for mutual benefit.

Community First uses three brands

in order to promote different value

propositions to two very different

market segments.

RG 209.32Reasonable inquiries about a consumer’s financial situation will

generally include:

• the consumer’s current amount and source of income or benefits

(this would include the nature and length of their employment—for

example, full-time, part-time, casual or self-employed—and whether

all or part of the consumer’s income is sourced from payments

under the Social Security Act 1991);

• the extent of the consumer’s fixed expenses (such as rent,

repayment of existing debts, child support and recurring expenses

such as insurance); and

• the consumer’s variable living expenses (such as food and utilities)

and drivers of variable expenses, such as dependants and any

particular or unusual circumstances.

5C’s of Credit

• Conditions

• Character

• Capacity

• Capital

• Collateral

Requirements and Objectives

• Type of finance

• Primary purpose

• Features

• Flexibility

Example Mr and Mrs Smith

• $30 000 for a caravan

• Repayments less than $500 per month

• Offered security

• Not Unsuitable

• Our Product offering (some alternatives)

• Unconscionable?

Loan type Loan amount $ Monthly Repayment (rounded)

Term in years Total interest charge (rounded)

Personal Loan

30 000 690 5 11 400

Mortgage top up

30 000 185 26 27020

Mortgage split

30 000 490 6 5390

Mortgage split

30 000 450 7 6330

3 yr Fixed Mortgage Split

30000 460 pm for 3 years followed by 490 for 3 years

6 5460

Overdraft versus Credit Card

• Interest rates

• Offset accounts

• Self discipline

• Needs analysis

Debt consolidation

• True debt consolidation rare at Community First

• Small credit card maximum limits compared to

the majors

• Personal service - high touch model

This can be grouped into the following;

Fixed Expenses

Rent/Board

Child Support

Insurance

Repayment of Existing Debts

Variable Expenses

Entertainment

Food & Utilities

Dependants

LIXI categories of Living Expenses

• Basic Housing & Property Expenses (Inc. Utilities)

• Groceries

• Communications

• Recreation & Entertainment

• Transport

• Insurance

• Child care and Education

• Clothing and personal care

• Other

Any Questions?