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Diploma of Finance and Mortgage Broking Management
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Before you begin
Read everything in this document before you start your assignment for .
About this document
This document includes the following parts:
• Instructions for completing and submitting this assignment
• Results and feedback
• Section 1: Complex lending and broking
• Section 2: Business management skills
Instructions for completing and submitting this assignment
How to use the study plan
We recommend that you use the study plan for this subject to help you manage your time to complete the assignment within your enrolment period. Your study plan is in the KapLearn subject room.
Completing the assignment
Saving your work
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The assignment
This assignment is split over 2 sections. The information and data you need to complete Sections 1 & 2 is presented in case studies at the beginning of those sections and each task.
Section 1: Complex Lending and Broking
The first section on complex lending and broking, requires you to answer the questions for one (1) of the three (3) available case studies. Each case study focuses on different lending scenario, (see diagram below).
Section 2: Business management skills
Section 2 requires you to complete the six (6) tasks as listed in this template.

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Capital City Finance and Mortgage Brokers (CCF & MB)
George and Mildred are very happy with the way you service your clients and are sure that you are a good fit for the team. They now want you to turn your focus to your primary task which is to assist in expanding the business by building relationships with selected real estate agents, accountants and legal firms through strategic alliances. They also want you to consider how CCF & MB can consolidate its relationships with its existing strategic partners.
Let’s recap on what you already know about Capital City Finance and Mortgage Brokers (CCF & MB).
It’s a family owned business providing a range of mortgage and finance broking services to the business and private sectors, with experience in all facets of finance and insurance providing expert advice covering a multitude of products and options existing within the market.
CCF & MB specialises in home loans, commercial lending, business lending, personal and motor vehicle finance and insurance (life and general), and focuses on helping clients find the finance service suited to their individual circumstances.
It provides its services through its association with the following partners:
• Australian Aggregators, a rising business in the aggregation business with an extensive panel of residential and commercial lenders, and asset finance.
• ABC General Insurance, a boutique insurance company specialising in a full range of general insurances.
• XYZ Life a small family-owned insurance brokerage specialising in the full range of life insurance products.
Based in the city, CCF & MB has the capacity to service clients from their office or anywhere at their clients’ convenience through its team of mobile brokers.
CCF & MB does not hold a credit license but operates as a credit representative of Australian Aggregators.
Since its inception 13 years ago CCF & MB has built a loan book of almost $1.2 billion and averages over $120 million in new loans annually.
CCF & MB’s vision is to be the mortgage and finance broker of choice in the greater metropolitan area
CCF & MB’s mission statement is to operate professionally in accordance with legislation, our licence and professional standards
CCF & MB’s values are as follows:
• to act with honesty and integrity at all times
• to provide unbiased advice and conduct business, free from any conflict of interest
• to maintain confidentiality in all dealings
• to meet all NCCP regulatory requirements
• to comply with all mortgage industry laws and regulations
• ensure quality and efficiency in its loan processes.
CCF & MB’s people
CCF & MB is owned by husband and wife, George and Mildred Spencer.
With over 35 years’ experience in finance and business ownership, George established and built a successful business dedicated to assisting clients with managing their finances effectively. Starting the business with his wife Mildred 13 years ago, George gained immense satisfaction in seeing it expand to service more and more clients across the city and greater metropolitan area. Although in recent years he has stepped back from dealing directly with clients, he still maintains a small select clientele. He also takes great pride in training and mentoring his team to enhance their performance.
Mildred has over 22 years of lending experience and is qualified not only to assist her clients with their mortgage requirements but also to assist them with their commercial finance requirements. She also holds financial planning qualifications. She specialises in asset finance.
The company has a small team of five additional consultants and two administration staff members. Profiles for the team is as follows:
• Jennifer Dee is recognised as one of the top female brokers in Australia. She has been in the broking industry for over 10 years and has a passion and dedication to assist and accommodate all of her clients’ needs with their financial dreams. Jennifer is an Accredited Mortgage Consultant with the Mortgage and Finance Association of Australia (MFAA).
• Louise Spencer (George and Mildred’s eldest daughter) is an Accredited Mortgage Consultant with the Mortgage and Finance Association of Australia (MFAA) and has been working as a loan consultant for almost two years. Louise started off in the lending industry in the office as an administrator to gain as much experience and knowledge as possible before taking a broking role. Her passion for helping her clients ensures that she is always available to her clients at a time and place convenient for them.
• Michael Spencer is George’s younger brother and is CCF & MB’s equipment finance specialist. He has over 25 years working in the equipment finance industry. He has developed an in depth understanding of the transport and agricultural industries, and also provides finance for general equipment, motor vehicles and computer equipment.
• Martin Long has specialised in equipment finance for the last three years, but prior to this he spent five years operating his own retail food business. This practical experience allows him to see things from his client’s point of view, including experience with equipment finance. He specialises in plant and equipment in the machinery, woodworking and packaging industries. Examples of some of the equipment he has financed are farm machinery, extrusion lines, plastic injection moulders, commercial catering equipment, woodworking plant, packaging lines, forklifts, office fit-outs and many different motor vehicles.
• Luis Ramirez migrated to Australia in 25 years ago as a young boy with his family. After completing high school he graduated from university with an accounting degree and worked in ANZ in commercial lending. He joined CCF & MB 4 years ago and specialises in vehicle and capital equipment financing. He provides ITC and general equipment lease funding options for clients. By providing better outcomes, both during and at the end of their equipment leases, Luis’ many clients have been able to reduce costs and maximise the value of their available budgets.
CCF & MB is a member of the MFAA as a broking business dealing directly with the public. Both George and Mildred are fellows of the MFAA. CCF & MB is also a corporate member of the FBAA.
All staff members, including consultants, are paid an annual salary plus superannuation. Consultants also receive a car allowance plus a percentage of trail commissions that are paid quarterly based on their performance targets.
CCF & MB’s panelled lenders
With access to an extensive panel of lenders, CCF & MB can meet most clients’ expectations. Residential lenders are listed in the following table.
Adelaide Bank Homeloans Limited Pepper Home Loans
AMP Homeside Phoenix-Circle Credit Union
ANZ ING Direct PLAN Lending
Australian Financial Keystart PN Bank
Australian First Mortgage La Trobe Resi
Bank of Melbourne Liberty Financial St George Bank
BankSA Macquarie Suncorp
Bankwest ME Bank The Rock Building Society
Bluestone Mortgage Mart Westpac
Citibank NAB Wide Bay Australia Ltd
Commonwealth Bank Newcastle Permanent
Heritage Bank Peoples Choice Credit Union
Commercial lenders and asset finance providers are listed in the following table.
Adelaide Bank Commercial Bibby Financial Services Pty Ltd Liberty Financial Commercial
ANZ Commercial Commonwealth Bank Commercial NAB Commercial
Australian First Mortgage Commercial IMB Commercial St George Commercial
Bank SA Commercial ING Direct Commercial Suncorp Commercial
Bankwest Business Banking LaTrobe Commercial Westpac Commercial
Adelaide Bank Commercial Macquarie Leasing Westpac Equipment Finance
ANZ Asset Finance Commonwealth Bank Asset Finance Liberty Asset Finance
Future developments
George and Mildred are very keen to expand and grow their business and are in the process of speaking with a number of real estate agents, accountants and legal firms with a view to forming strategic alliances.
Due to the expected increase in business George and Mildred are seeking to employ another consultant to take on the extra work. This person will be required to:
• build strategic relationships with a number of real estate agents, accountants and legal firms already identified
• identify and foster relationships with other real estate agents, accountants and legal firms
• provide finance and mortgage broking services to new clients identified through these strategic alliances.
Section 1: Complex lending and broking
Only complete Tasks 1-3 for one (1) of the case studies in Section 1
Case study A — Tom and Steve Broad
Background
Congratulations, you have just been appointed by George and Mildred as the new consultant to handle the extra work. Whilst your major focus is to build the strategic relationships you are also expected to build your own client base using your own connections and networks.
Two brothers, Tom and Steve Broad have approached you with their desire to jointly purchase two apartments in the same building. They want to purchase them as rental properties. The building has 12 apartments. The units have 80% permanent tenants in place and the remaining 20% are used for holiday rentals. The location is a highly sought after area and all holiday periods are fully booked.
The brothers have invested together before and have experience in buying and selling property. They have sold all their other investment properties and the units will be their only investment until they can identify another opportunity. The cash at bank is mostly from the sales of other investments.
The property
Address: Unit 1, 92 Seaside Lane, Coastville, Your State Unit 9, 92 Seaside Lane, Coastville, Your State
Purchase price: $350,000 $385,000
Description: 2 bedroom strata title unit on the ground floor 2 bedroom strata title unit on the ground floor
Body corporate fee $2,500 per annum $2,500 per annum
Proposed income Permanent rental at $450 per week Holiday rental at $45,000 per annum
Agent details: Steven Allstone Steven Allstone
Phone: 8282 1113 8282 1113
Mobile: 0412 880 088 0412 880 088
The clients
Client Tom Broad Steve Broad
Current address: Unit 12, 22 Wentworth Lane, Highville, and has lived there for eight years 23 Dury Lane Pennant Tops and has lived there with Marie for six years. Property owned in joint names.
Value $650,000 $450,000
Home phone: 9001 2121 9002 1212
Status Tom is single, no dependents Steve is married to Marie with no children
Employment PAYG and has been with the same employer for 10 years Self-employed tradesman operating as a sole trader for 12 years
Income $85,000 per annum $65,000 per annum for Steve
$30,000 per annum for Marie
Cash at bank $250,000 $150,000
Superannuation $150,000 $150,000 (Steve), $20,000 (Marie)
Contents $100,000 $130,000
Motor vehicle $60,000 $30,000 (Steve), $15,000 (Marie)
Liabilities — home loan $300,000 @ 7.2 % P & I, term 25 years $100,000 @ 7.2 % P & I, term 25 years
Liabilities — credit cards $5,000 limit cleared monthly 3% min payment $15,000 limit, $5,000 debt 3% min payment
Assignment tasks (student to complete)
Task 1a — Identify the clients’ complex broking needs
Prepare a list of questions that you would need to ask Tom and Steve about their history and experience, and the unit purchase.
In preparing your list of questions you should ensure that you cover the following:
• The complex features of Tom’s and Steve’s situation and objectives.
• Potential risks and Tom’s and Steve’s tolerance of risk. In considering risk you should consider:
– how you would identify the risks and the criteria you used to evaluate these risks
– how you would assess their current exposure, the tools you would use in terms of probability, impact and the consequences.
(800 words)
Student response to Task 1a
-What is the main purpose for this purchase? Is that for tax strategy? Capital growth? Or is for rental income?
-Given you have done this together before, What working and what’s not working for both of you?
-As you may be aware of, the joint borrowing will affect each other for future borrowing, as 100% liability will assign to each other but only 50% rental income will take in consideration ( for most banks).
-If one party has difficulties to pay the loan, the other pay will liable for the other half.
-If is for tax strategy you may able to use your own property as an additional security to borrow up to 100% ( including stamp duty)
- For unit 9, given it is a holiday rental, some lenders have restrictions on them, such as lower loan ratio (LVR) or it can consider as a business loan, therefore it is always good to check with the lenders before proceeding. With unit 1, which is form part of the 80% with a permanent tenants, generally speaking most lenders will accept them, but it Is always good to check the size of the apartment, as certain lenders will have a size restriction depends on location.
-
They are in a pretty good spot given their age and income, with Tom’s LVR is on 46.15% with his home and Steve is on 22.22% LVR, as advised above if they are focus on effective tax strategy they may to utilize the equity and cash available in their accounts, such as using the cash to pay off their home loan and utilise the equity, it will reduce the taxable income as the property is negatively gear.
If they want to use the equity as advised above, then Steve’s wife may need to come into the picture as she is joint owner of the property, which require her consent if Steve decide to go down to this path or they could either do this in 3 names. (Tom, Steve and Marie) to avoid the guarantor option.
Assessor feedback:
Task 2a —Develop complex broking options
You are required to prepare a full report for Tom and Steve by outlining the process and the risks (potential and real) of which Tom and Steve should be aware.
In a suitable format, document the process that is required for them to purchase the two units as their investment properties, establishing a joint loan in the brother’s names. You should also include a selection of lenders that will consider this style of borrowing.
In developing your report you should cover the following:
1. The parties to the loan including any opportunities or constraints that could impact on their application
2. The different options available and your recommendation of the best loan structure with the lender — are they using their own property as cross security or the cash at bank as deposit?
3. What various forms of titles could an apartment be registered in
4. A list of the lenders that are able to lend
5. The procedure to commence a loan for a property like this
6. The steps that will need to be in place
7. The client responsibilities, so Tom and Steve fully understand the loan
8. An outline as to the process and what the client needs to arrange
9. The documentation needed to commence the borrowing
10. The name in which the client will sign the contract/purchase/offer and acceptance. If a Family trust is involved what name would the title of the property be registered in, and advise what state you are using to base your answer on
11. The state revenue requirements
12. Which lenders may also require a personal guarantee from Steve’s spouse
13. The maximum LVR to the consumer
14. A summary of all fees and charges — including those for setup and those of the lender.
(800 words)
Student response to Task 2a
First to confirm what structure is the loan in, whether they want to utilise using the equity of the Steve’s & Marie’s Property, as this will affect the loan parties. If they decide not to use the joint property then they may use the cash in the bank as an additional security to avoid the guarantor option.
Based on the above, given these investment properties, the best option is to have Steve’s & Tom’s name as a joint borrower, then Marie be the guarantor to the loan. This can also prevent if bank only lend up to 60% on unit 9, they don’t need to come up with the extra cash. The total loan ( worst scenario) should be $371,000 ( unit 1) & $408,000 total loan = $779,000 securing by the purchasing property and both properties which own by Steve & Tom. If Marie doesn’t feel comfortable to use the home as security, then they can use the cash in the bank as additional security to maximise the negative gearing. In terms of lender, it is all comes down to what they currently use, or prefer, given we may need to do second mortgage. It will make more sense to go with the same/one bank to avoid any issue in between.
Lenders available are if using cash option
NAB Broker, CBA, Westpac, BankWest, ING
Lender will recommend if Marie come into the equation is CBA, given the limitation for sibling guarantor.
Once we determined the loan structure, we may try to bring all loans into the one bank and apply the loan together with the purchase. If they contract is ready then we will put in a formal application for the purchase otherwise will obtain pre-approval. Depends on the settlement date from the application date, if times permitted we will get the refinance happened first then the purchase, otherwise we will apply it separately.
The loans are under both names, therefore both parties are responsible for each other loans for this purchase, this will also impact the future borrowing as 100% liabilities and 50% rental income counted if they do a separate loan.
Process as follow:
- Application for the refinance
- Application to the purchase
- Refinance approval then settlement
- Purchase approval
- Refinance MUST settled before Purchase.
Documents required:
1) Tom’s last 2 payslips
2) Steve’s Last 2 years tax return and notice of assessment
3) Bank statement for all loans for last 6 months
4) Purchasing property Contract of Sale for both properties
5) Rental appraisal for both units
6) Completed application form
7) A Copy of the driver license / Passport for all parties.
Based on Victoria policy, if property is under a family trust, all trustees need to be in the title as a guarantor, in this case will be Tom and Steve will be in the title.
A surcharge apply to the land hold under trust compare to the general land tax rate.
-?????Lender
The max LVR is 80% on Unit 1 and 60% on Unit 9 ( depending on the contract and special condition)
Annual fees of $395 per year no application fees and monthly keeping fees.
Assessor feedback:
Task 3a — Implement complex loan structures
Tom and Steve have accepted your recommendations and have given you authority to proceed with their application.
As part of implementing their loan application you are required to prepare a formal written loan submission to the lender for pre-approval. Your loan submission must include the following:
• serviceability calculations
• the proposed structure of the loan given there are two brothers and there is a variance in income
• the loan amount
• the property style, size, use
• any other information that is relevant to the lenders requirements.
In additional to these requirements you should also include:
• your obligations under the NCCP (if any)
• maximum loan amount
• maximum loan terms
• any ATO consideration to be made
• your state legislation and OSR requirements
• your general advice restrictions
• property purchase requirements.
(800 words)
Note: Any assumptions you make should be listed, and not be in conflict with the case study information already provided.
Student response to Task 3a
Customer seeking finance to funds their investment property purchase, purchase price for unit 1 is $350,000 under both names, contribution come from their saving, unit 9 is purchasing under the trust which both applicant will be the trustee for the trust as guarantor to the loan, purchased price is $385,000
Unit 1 loan will be @280,000 with a purposed rental income of $450 pw as investment property, and unit 9 will be @ $231,000 with rental income of $45,000 p.a as a holiday rental
App1’s Tom is a PAYG with the same job for over 10 years, stable income and job @85,000 p.a. with a good saving record of approx. $250,000 in the bank, he has experience buying and selling property with app2
App2’s Steve has been SE for over 10 years, stable job and income, good saving record of $150,000 and as advised above he had experience buying and selling properties with app1.
both applicants will consider as low risk to the bank.
Individual borrower will be regulated under NCCP but not under the trust
Assessor feedback:
Case study B — Ray Murdoch and Steve Brown
Only complete Tasks 1-3 for one (1) of the case studies in Section 1
Background
You have just met with Ray Murdoch and Steve Brown, referred to you by another commercial client.
Ray Murdoch and Steve Brown jointly own a successful and growing business that manufactures metal pallets. They trade under the name Pallets-R-Us Pty Ltd. The pallets are manufactured using material that is lightweight and durable. There has also been a very structured approach to the research and development for the engineering and design of the pallets. The pallets are used in all industry sectors. Part of the process involves powder coating the finished product, which is currently outsourced to a local well-established contractor.
It is critical that Ray and Steve’s product meets market needs. They need to maintain sustainable production and operating costs if they are to forecast their sales and cost of sales.
They have a well-established client database that provides them with repeat ‘business to business’ dealings. Whilst they have only been trading for 26 months they have a solid business plan with written supply contracts with three major business clients and several smaller business clients.
Ray and Steve now require a loan to assist them with the purchase of a sophisticated machine, using the technical platform system CNC. This machine can be programmed to rapidly fabricate multiple components. The machine has an expected commercial lifespan of at least 15 years with operating software to be updated every three years. This software and upgrades is included in the purchase price of $800,000.They need to import the machine from the US. Initial enquiries with the US supplier have indicated that they will require a letter of credit for the import of the machine.
Their business employs five people and, with the expected increase in business through the automation of production, they have forecast that they will need to recruit an additional two staff members in the next 3–6 months to meet sales/production demands.
Ray has been in the metal fabrication field all his working life. He has an MBA and understands financial management. He also has solid engineering skills and developed the majority of the design works for the business. He is married and has no dependants. His wife is a school teacher and she will be retiring at the end of the year.
Steve worked with Ray at ‘Protech’ as a foreman. His skills are in production and managing project/job flow. He has high level technical skills and can complete works to specification at a high standard.
Steve and Ray have provided the last two year’s financial accounts for the trading business, as well as interim accounts for the current financial year.
Applicant information
Client Ray Murdoch Steve Brown
Current address: Unit 43, 25 High St Northville, Your State and has lived there for six years 23 Desmond Lane Northville, Your State and has lived there with Kate for seven years. They own property jointly.
Value $750,000 $900,000
Home phone: 9001 2121 9002 1212
Status Ray is divorced with no dependent age children Steve is married with no dependents
Employment Self-employed business owner Self-employed business owner
Income $100,000 per annum $100,000
Property $750,000 $900,000
Cash at bank $12,500 $9,600
Contents $100,000 $85,000
Superannuation $250,000 Steve $350,000, Kate $60,000
Motor vehicle $40,000 $55,000
Home loan $250,000 @7.2% P & I Term 18 years $350,000 @7.2% P & I Term 22 years
Credit card $25,000 limit with debt of $15,000 payment @3% $10,000 limit with debt of $3,000 payment @3%
Car loan $0 $15,000 payment @ 9% payable 4 years
The business
Year 1 net profit after tax $200,000
Year 2 net profit after tax $220,000
Current year interim profit (10 months trading) $200,000
Wages to partner 1 – years 1 and 2 $100,000
Wages to partner 2 – years 1 and 2 $100,000
Dividend to private investor (flat profit fee) – years 1 and 2 $45,000
Key balance sheet items
Cash $25,000
Debtors $220,000
Creditors $100,000
Notes The business currently meets all creditor payments at 30-day terms.
Debtor collection has been solid. They invoice an upfront payment of 50% of the sale price, which assists in funding their production.
They have orders of $1m over the next 3 months and have made an increase in their gross profit margin.
The orders are from several clients, so their debtors will be well spread.
Task 1b — Identify the clients’ complex broking needs
Prepare a list of questions that you would need to ask Ray and Steve about the proposed transaction.
Calculate the required servicing for the new debt, and the lender comfort surplus.
Outline the process and the risks (potential and real) of which Steve and Ray should be aware.
(800 words)
Student response to Task 1b
Answer here
Assessor feedback:
Task 2b —Develop complex broking options
You are required to prepare a full report for Tom and Steve by outlining the process and the risks (potential and real) of which Tom and Steve should be aware.
In a suitable format, document the process that is required for Steve and Ray to obtain appropriate finance for their equipment and set up the loan.
In developing your report you should cover the following:
1. The parties to the loan
2. The product type you would recommend, including an appropriate term and residual (if any)
3. The framework and contents of the letter of credit requirements
4. A list of the lenders that are able to lend
5. The procedure to commence a loan
6. The steps that will need to be in place
7. The client responsibilities, so Steve and Ray fully understand the loan
8. An outline as to the process and what the client needs to arrange
9. The documentation needed to commence the borrowing
10. The name in which the client will sign the contract to purchase
11. A statement of those lenders who may also require a personal guarantee from the borrower’s spouse
12. A summary of all fees and charges — including those for setup and those of the lender.
(800 words)
Student response to Task 2b
Answer here
Assessor feedback:
Task 3b — Implement complex loan structures
Tom and Steve have accepted your recommendations and have given you authority to proceed with their application.
As part of implementing their loan application you are required to prepare a formal written loan submission to the lender for pre-approval. Your loan submission must include the following:
• serviceability calculations, including all borrowing facilities of Directors
• the proposed structure of the loan
• the loan amount
• the property style, size, use
• any other information that is relevant to the lenders requirements.
In additional to these requirements you should also include:
• your obligations under the NCCP (if any)
• maximum loan amount
• maximum loan terms
• any ATO consideration to be made
• your state legislation and OSR requirements
• your general advice restrictions
(800 words)
Note: Any assumptions you make should be listed, and not be in conflict with the case study information already provided.
Student response to Task 3b
Answer here
Assessor feedback:

Case Study C — Bill Smith and John Jones
Only complete Tasks 1-3 for one (1) of the case studies in Section 1
Background
You are meeting with prospective clients, Bill Smith and John Jones. They have been referred to you by their accounting firm, Buckland Accountants.
The prospective clients need assistance with the acquisition of owner-occupied premises to replace their current business premises which is rented and becoming too small for their growing business.
True Blue Pty Ltd trades as True Blue Real Estate and was purchased as an existing real estate business three years ago. Bill Smith and John Jones are the directors.
The shareholders of True Blue Pty Ltd are Bill Smith, John Jones and a private investor, Amanda Williams, who does not work in the business and has no involvement in its day-to-day operation. Each holds an equal one-third share in the company.
Bill and John have each been in real estate for approximately 15 years, focusing on residential sales and leasing. They have gained their work experience in the local area. A wealth of knowledge of the area, coupled with an ever-expanding client base, has resulted in sustained and solid growth for the business.
Details of the property
Sale price of the property is $950,000. (There is no GST requirement as it is being purchased as a going concern.)
A deposit of $95,000 has been paid and is being held in the trust account of the settlement agent/solicitor.
A cash contribution of $233,240 will be made from the general working account of the business.
Property purchase and loan to be in the name of a new entity — True Blue Pty Ltd as trustees for the Smith Jones Unit Trust. There are a total of 99 units in the trust and the unit holdings mirror the shareholding of the trading entity, True Blue Pty Ltd.
The property is situated at 100 Smith St, Yourtown, with contracts exchanged at today’s date and an anticipated settlement date of 90 days.
General observations about the property
The property is in good condition and is well located in the same street as the current rental premises.
It is anticipated that the premises will meet the needs of the business for the next 10 years.
Summary of initial client fact find
Bill and John have provided the last two years’ financial accounts for the trading business, as well as interim accounts for 10 months of the current financial year.
True Blue Real Estate’s financial accounts
Year 1 Year 2
Net profit after tax $92,000 $140,060
Current year projected - $175,000
Add back (rent) $47,000 $49,142
Additional superannuation to director $31,400 $34,539
Wages to partner one $70,640 $70,640
Wages to partner two $70,640 $70,640
Payment to private investor (fixed flat profit fee) $45,000 $45,000
Applicant information — Bill Smith
Personal details
Address 26 Nowry Road, Yourtown, 1234
Date of birth 17 February 1958
Phone 7890 1234
Financial details
Gross income $70,640
Owner occupied property valued at $550,000
Outstanding debt on owner-occupied property $210,000 @ 6.2% p.a. on a principal and interest basis
Credit card with limit $15,000 Outstanding debt — $5,000
Superannuation $250,000
Motor vehicle valued at $30,000 (nil debt)
Applicant information — John Jones
Personal details
Address 14 Mary Street, Yourtown, 1234
Date of birth 14 October 1970
Phone 0146 234 577
Financial details
Gross income $70,640
Owner occupied property valued at $750,000
Outstanding debt on owner occupied property $300,000 @ 7.2% p.a. on a principal and interest basis
Credit card with limit $5,000 Outstanding debt — $1,000 cleared monthly, monthly
Superannuation $200,000
Motor vehicle valued at $45,000
Outstanding debt on motor vehicle $15,000 (Assume five year term at 9% p.a. interest)
Business details
Cash in business account $400,000
Other information
Applicants’ solicitor Moffat and Co (contact is Maree Moffat)
16 Tatlor Street, Yourtown, 1234
Phone 7890 5678
Applicants’ accountant and registered office Buckland Accountants (contact is Simon Williams)
28 Mary Street, Yourtown, 1234
Phone 2982 0987
Applicants’ banker Westcoal Building Society, Yourtown, 1234
Notes:
• Assume for credit card debts, the minimum monthly commitment should be calculated at 3% of the credit limit.
• Each of the working directors has appropriate death, income and disability insurance in place.
• A sensitisation factor of 2% should be used when calculating financial commitments.
Assignment tasks (student to complete)
Task 1c — Identify the clients’ complex broking needs
Prepare a list of questions that you would need to ask Bill and John about their history, experience, business performance and the property purchase.
In preparing your list of questions you should ensure that you cover the following:
• The complex features of Bill’s and John’s situation and objectives.
• Potential risks and Bill’s and John’s tolerance of risk. In considering risk you should consider:
– How you would identify the risks and the criteria you used to evaluate these risks
– How you would assess their current exposure, the tools you would use in terms of probability, impact and the consequences.
(800 words)
Student response to Task 1c
Answer here
Assessor feedback:
Task 2c — Prepare complex broking options
You are required to prepare a full report for Bill and John by outlining the process and the risks (potential and real) of which Bill and John should be aware.
In a suitable format, document the process that is required for them purchase the new property and establishing the loan.
In developing your report you should cover the following:
1. The parties to the loan
2. The best physical set up with the lender — are they using their own property as cross security or the investment property?
3. What name should the title be registered in given there is a Trust involved and advise what state you are basing your answer in
4. The procedure to commence a loan for a property like this
5. The steps that will need to be in place
6. The client responsibilities (Bill and John should fully understand the loan that is proposed)
7. An outline as to the lending process and what the client needs to arrange
8. The documentation needed to commence the borrowing
9. The name in which the client will sign the contract to purchase
10. The state revenue requirements
11. A statement as to whether guarantees from spouse’s or any other security will be required and why this is/is not the case
12. The maximum LVR
13. Suggest three (3) lenders to client’s that would be likely to consider this request
14. A summary of fees and charges — including those for setup and those of the lender.
Note: You may make any reasonable assumptions necessary in order to complete the proposal.
Student response to Task 2c
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Assessor feedback:
Task 3c — Implement complex loan structures
Bill and John have accepted your recommendations and have given you authority to proceed with their application.
As part of implementing their loan application you are required to prepare a formal written loan submission to the lender for pre-approval. Your loan submission must include the following:
• serviceability calculations
• the proposed structure of the loan given the purchases is in the name of a new Unit Trust entity
• the loan amount
• the property style, size, use
• proposed security
• any other information that is relevant to the lenders requirements.
In additional to these requirements you should also include:
• your obligations under the NCCP (if any)
• maximum loan amount
• maximum loan terms
• any ATO consideration to be made
• your state legislation and OSR requirements
• restrictions on overseas purchase, if any
• your general advice restrictions
• property purchase requirements.
Notes:
• Any assumptions you make should be listed, and not be in conflict with the case study information already provided.
• You will need to calculate and include your workings of the required servicing and debt service cover ratio for the new debt and existing borrowings of Directors. Comment on the DSCR comfort level for lender.
• You may make any reasonable assumptions necessary in order to complete the proposal.
Student response to Task 3c
Answer here
Assessor feedback:
Section 2: Business management skills
Task 4 — Developing and nurturing relationships with clients, other professionals and third party referrers
George and Mildred now require you to write a plan to assist in developing and nurturing relationships with clients, other professionals and third party referrers.
Your plan should address the following:
1. How CCF & MB’s policies and procedures and legislative, regulatory and professional codes of practice impact on developing and nurturing relationships
2. How you would use CCF & MB’s social, business and ethical standards to develop and maintain positive relationships
3. The importance of confidentiality and how you would maintain it in your dealings with colleagues, clients and other parties
4. How you would adjust your Interpersonal style to the needs and situation of other parties
5. How you would go about developing and maintaining business and professional networks and other relationships to benefit the organisation, and how you would use them to identify and cultivate relationships in order to promote and market the organisation
6. How you could use and cooperate with other professionals and third parties to expand and enhance the reputation of the organisation, and to identify new and improved business practises
7. How you would build referral business through appropriate communication channels to find and secure new business relationships
8. How you would identify referral needs and provide information p about CCF & MB’s relevant products and services
9. How you would secure interviews with referral business so that then needs of clients can be met.
(1,000 words)
You may use any format for your plan but it must address each of the points above. If you are unsure as to how to write a plan, you can refer to the Business Growth and Marketing topic and use the suggested SMEAC format outlined in Part 5, Section 12.
When completing this task, assumptions are permitted although they must not be in conflict with the information provided in the background information.
Student response to Task 4
Answer here
Assessor feedback:
Task 5 — Growing the business
Having considered how you would go about building and nurturing relationships, George and Mildred now require you to turn your attention to marketing and promoting CCF & MB’s business. This requires you to develop a marketing plan for the business.
In developing your marketing plan you should consider the following:
1. Your plan should be developed in line with CCF & MB’s vision statement
2. The identification of target markets using a combination of research and your own personal experience
3. The identification of your major competitors (at least two) with a competitor analysis developed for each competitor
4. The identification of CCF & MB’s market position based on your research findings and analysis
5. How you would promote CCF & MB’s brand and the tools you would use to achieve this
6. The provision of options for increasing yield per existing client
7. How you would implement your plan and monitor it to ensure objectives/goals/performance indicators are being met
8. How you would adjust your plan if required.
(1,000 words)
You may use any format for your plan but it must address each of the points above. If you are unsure as to how to write a plan, you can refer to the Business Growth and Marketing topic and use the suggested SMEAC format outlined in Part 5, Section 12.
When completing this task, assumptions are permitted although they must not be in conflict with the information provided in the background information.
Student response to Task 5
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Assessor feedback:
Task 6 — Identifying risk and applying risk management processes
George and Mildred have become very concerned about the potential risks that could jeopardise CCF & MB’s business operations. They were very impressed with your growth and marketing plans for CCF & MB so they have now moved you into more of a general manager’s role with expanded responsibilities, including managing CCF & MB’s risk. As part of your new responsibilities you are required to develop a risk management plan.
In producing this plan you are required to:
1. Establish the context for CCF & MB’s risk management plan
2. List and explain the tools you will use in assessing the risks you identify
3. Identify the stakeholders you would consult in establishing context and the tools you would use in identifying CCF & MB’s risks
4. Identify at least two risks that CCF & MB could face for each of the six categories of business risk including strategic risks, compliance risks, financial risk, operational risks, market and environmental risks and reputational risks with an appropriate risk statement for each identified risk
5. Conduct a risk analysis and risk evaluation for the risks you have identified
6. Identify treatments for them
7. How you will monitor and review them in your risk management plan.
When you are defining the risk criteria you intend to use you are required to create your own risk matrix to address likelihood and consequence.
Document your risk treatment plan using a risk register.
You may make any assumptions in producing your plan but these should be documented either in the body of your plan or separately before you produce it.
Student response to Task 6
Answer here
Assessor feedback:
Task 7— Improving the business
Over the last few months business for CCF & MB has been very good with a number of new clients coming on board as a result of implementing your business growth and marketing plans. However neither you or the business owners are satisfied with maintaining the status quo; as you and they are committed to a program of continuous improvement.
You all feel that CCF & MB’s competitive advantage needs to be strengthened and a SWOT should be undertaken to establish CCF & MB’s strengths and weaknesses including benchmarking the business against the industry. You now decide that you will carry out a diagnosis of the business including a SWOT analysis and a benchmarking exercise to improve CCF &MB’s competitive advantage and its business. You are to produce a document covering your diagnosis which will be distributed amongst CCF & MB’s key personnel.
As a minimum your document should cover the following:
1. The data you have used as part of your diagnosis to identify CCF & MB’s competitive advantage
2. A SWOT analysis to identify CCF & MB’s strengths and weaknesses, its threats and opportunities
3. How you identified and sourced relevant benchmarking data
4. How you selected the key indicators (and who you consulted with) for your benchmarking exercise
5. A consolidated list of the areas for improvement you have identified with a cost-benefit ratio established for each of them
6. Recommendations on the changes that may be required that will affect existing workflows or CCF & MB’s organisational structure
7. A high-level action plan that will implement and monitor the recommended changes to be made.
In addition to the material on your Subject 2 learning guides the following links give you access to a step-by-step guide to benchmarking and determining competitive advantage:
http://moodle.unitec.ac.nz/pluginfile.php/69011/mod_resource/content/0/benchmarkingmadesimple.pdf
http://www.researchbydesign.com.au/media/RBD-WhitePaper-Competitive-Advantage.pdf .
Student response to Task 7
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Assessor feedback:

Task 8 —Managing people performance
One of your key responsibilities as general manager is to develop and implement ways to improve the performance of CCF & MB’s consultants and other staff members.
Answer the following questions:
1. Why is it important to consult with stakeholders when allocating work? What are the possible consequences of allocating work without consultation?
2. Describe the process you might follow when developing quantitative and qualitative performance criteria. You should explain how you ensure that the criteria relate to CCF & MB’s objectives and how to motivate staff members to achieve these objectives.
3. Describe the different ways you might gather information about a staff member’s workplace performance.
4. What are the benefits of evaluating and monitoring staff members on a continuous basis?
5. Describe how you might do this in CCF & MB.
6. Why is it important to document the performance management process? Explain the possible consequences of not retaining appropriate records of this process.
7. How can reward and recognition influence the work output of employees? Describe non-financial ways of motivating employees.
Your answers should be no more than 250 words for each numbered question above.
8. Design a high-level performance management process for CCF & MB to be rolled out to all staff members.
9. Who should you consult when designing the performance management process? List who you would consult and the reasons why.
10. Develop a checklist for delivering regular performance appraisals, including a section for team leaders and supervisors to complete a section for team members participating in the performance appraisal process.
Your answer should be no more than 800 words.
Martin and Luis are working together on project involving the preparation for a loan application for one of CCF & MB’s most influential clients, a property developer. Martin missed a deadline and the whole project is now behind schedule by a week. This is the third time in a month that he has missed a deadline. Martin has had problems with meeting deadlines in the past and has already had a written warning.
As the general manager you have been monitoring Martin’s performance over the past month, providing informal feedback about his role in the project. Although he has made several improvements regarding his performance, his inability to meet deadlines has forced the delay of the client’s development a further month. CCF & MB made a commitment to the client that the loan application would be with prospective lender two weeks ago.
The client is not happy that his he does not yet have an approval and is considering cancelling the agreement he has with CCF & MB and going elsewhere.
11. You have arranged to meet with Martin to talk about the project and his input. How would you go about providing constructive feedback to Martin?
Your answer should be no more than 500 words.
Student response to Task 8
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Assessor feedback:
Task 9 — Showing leadership in the workplace
Leadership is defined as the ability to influence others. This assessment task requires you to reflect on your own ability to positively influence others in the workplace and the negative aspects of poor leadership.
1. Reflect on a situation where you have had a positive impact in the workplace. Please include in the reflective writing the skills, decisions and or behaviours you demonstrated that contributed to this positive change and what the impact was for the team, clients and the organisation. (400 words)
2. Reflect on a situation which was or could have been damaging to the organisation. Please include the behaviours, standards or values that were demonstrated and explain why they were detrimental. (400 words)
3. In your role as the general manager of CCF & MB create your own personal performance plan.
You may use your own personal performance plan or alternatively you can use the example below. In developing your personal performance plan you should ensure that your personal KPIs reflect CCF & MB’s goals and objectives and how you can help in building CCF & MB’s integrity and credibility.
What are my development objectives? Priority What activities do I need to undertake to achieve my objectives? What support/resources do I need to achieve my objectives Target date for achieving my objectives Actual date of achieving my objectives

Review date:
4. Feedback from colleagues, staff and management may be gathered informally and formally including performance review feedback. Why is it important to analyse and interpret all feedback? (400 words)
Student response to Task 9
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Assessor feedback: