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BFCSA: ASIC Calculator Public Policy 2005. ASIC fails to tell the truth on internal Secret Servicability BANK Calculators with Passwords to Brokers. WE explain the TRUTH

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ASIC is mischievously misguiding Parliament and the Senators re Public Calculators.....BFCSA are speaking of Internal Serviceability Calculators that ASIC permitted banks to use to assess loans and banks refuse to hand over copies to the victims.  ASIC permitted Banks to give the Brokers the Passwords.  We have copies of passwords for most banks (see Breaking News documents above).  ASIC has failed to mention the discussions that took place in 2005 re internal bank secret serviceability calculators.  Do not fret - we have copies.  THE TWO CALCULATORS are totally different and ASIC is attempting to mislead the Senators before they appear at the Inquiry.  But they did admit in 2005: ‘However, ASIC is also aware that calculators can mislead consumers if they are not designed responsibly. '

YES INDEED "mislead borrowers in $57 Billion worth of TOXIC LOANS and 18% toxic FULL docs of the $1.28 Trillion mortgage market

IR 05-64 ASIC releases policy on calculators

Tuesday 20 December 2005

ASIC has released its policy on the regulation of generic financial calculators and issued Class Order [CO 05/1122Relief for providers of generic calculators to give effect to the policy.

Generic financial calculators are tools that make numerical calculations relating to financial products, but that do not advertise or promote a specific financial product. Generally these tools allow consumers to input various facts to calculate the estimated value of total superannuation, savings or investments or the level of contributions required to reach a particular goal.

ASIC's relief will ease the licensing, conduct and disclosure requirements for providers of generic financial calculators and promote the provision of high-quality information to consumers through calculators. This relief means that providers of generic financial calculators will not require an Australian Financial Services (AFS) licence with an advice authorisation or, if already licensed, will not need to meet the conduct and disclosure requirements in Part 7.7 of the Corporations Act 2001 (the Act) subject to certain conditions. The conditions of the relief are set out in the attachment to this release.

‘Financial calculators can help consumers to inform themselves about financial products and services, particularly as most calculators are on-line and easily accessible. Our policy and relief will make it easier for industry to provide these calculators by electronic and other means,’ said ASIC Executive Director of Regulation, Mr Malcolm Rodgers. 

‘However, ASIC is also aware that calculators can mislead consumers if they are not designed responsibly. So we've imposed a number of conditions on this relief designed to ensure calculators produce good quality and reliable information.’

The release of this policy and class order follows extensive consultation with industry bodies. In August 2005, ASIC released a consultation paper, ‘Online Calculators’, and received a number of submissions in response.

ASIC is still considering its policy regarding other types of calculators such as product-specific calculators (ie calculators that do advertise or promote specific financial products) and risk-profilers. It may be necessary for ASIC to consult further with industry before finalising its policy.
ASIC's policy on the regulation of generic financial calculators is set out in section F of Policy Statement 167 Licensing: discretionary powers [PS 167].

End of release

Attachment to [IR 05-64]: ASIC releases a new policy on the regulation of generic financial calculators

[CO 05/1122] provides licensing or disclosure and conduct relief for providers of financial calculators that meet certain minimum conditions. The relief only applies where:

  • the calculator does not advertise or promote a specific financial product;
  • if the calculator is an electronic facility or device, the calculator enables a person using it to alter the default assumptions applied by the calculator (other than a statutory assumption that reflects a rate or amount of fixed by legislation) and performs a calculation using the changed assumptions;
  • the default assumptions applied by the calculator are, unless changed by the user, reasonable;
  • the calculator will display to the user in the ordinary course of its use or have printed on it all of the following:
    • a clear and prominent statement about the purpose and limitations of the calculator;
    • a clear and prominent explanation of why the default assumptions, including any statutory assumption, are reasonable;
    • a clear and prominent explanation of the impact of any significant limitation of the calculator;
    • where the calculator estimates an amount payable at a future time—a clear and prominent statement specifying whether or not the estimate takes into account an assumed change in the cost of living between the time of the preparation of the estimate and the future time; and
    • a clear and prominent statement to the effect that the calculator is not intended to be relied on for the purposes of making a decision in relation to a financial product and that the user should consider obtaining advice from a financial services licensee before making any financial decisions;
  • if the calculator is an electronic facility or device—the calculator does not prevent the user from readily printing or electronically storing the estimate; and
  • the provider keeps a copy of the calculator for 7 years from when it is first made available.

[CO 05/1122] also revokes Class Order [CO 05/611] Relief for providers of superannuation calculators. [CO 05/611] provided licensing or conduct and disclosure relief to providers of generic superannuation calculators. Providers of generic superannuation calculators can now rely on [CO 05/1122].

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  • doyla66
    doyla66 Tuesday, 05 November 2013

    Thankyou, Denise.
    I hope all relevant Senators are on the page with the existence of the second calculator and the fact that both calculators are administered by internal Bank staff - not brokers.

    As this is complex and also important to understand, I'm hoping I've got the picture.
    There are two different calculators used in assessing loan affordability and the lending process.
    The first one is used purely for assessing loan serviceability and should contain only the personal and financial data of the borrower transferred accurately from the Loan Application Form. Where a Broker is involved he/she has a Bank issued ID and password access to this, the Banks serviceability calculator. Thus the Bank has approved the issue of this online access by the Brokers.
    Then there is a second internal calculator, possibly used by the Bank's credit assessor. And that would be used to check the accuracy of the Broker's calculations and/or for other Bank purposes in the credit provision process?
    The Bank authorised the creation and setting up of both calculators, including the default values on risk assessment and anticipated borrower "repayments".
    Borrowers do not have access to either of these calculators. As the borrower's data should have been the only data input to the first calculator a copy of that calculator should be provided to the borrower, along with all paperwork in the Loan Application bundle.
    What happens when there are "errors" in the Broker/Bank Manager/Bank staff transfer of borrower data into this calculator?

    The Bank staff can change the basic maths behind the calculator anytime....?
    Who approves and documents these changes? Presumably someone in the Bank.
    Who determines whether fair use applies if the regulator, ASIC, isn't checking these calculators or attending to complaints that the Banks calculator must have been wrong when the loan was assessed?

    If all checks set up in the theoretical lending process applied especially the return of the LAF bundle and the Broker's calculations to the Borrower for checking along with the contract for signing then there should be few administrative errors of the kind we can see in the evidence under "Breaking News" on this site. Clearly that was not done - nor was there any intention to adhere to the required process by the Bank or the Brokers, acting under the Bank/lender instructions. And clearly a lot of rubbish data was entered into these calculators for the purpose of getting these loans over the line. Note the comment by brokers that they're finding loans are now being rejected at the Bank level of credit assessment - of course that may just be hype to make the Banks look like they're doing a better job of it.

    If ASIC or another external agency hasn't checked the assumptions and maths/ratios in the calculators themselves then this is a second source of errors and potential fraud. Any of these calculators could be quite wrong in their assumptions e.g. forecasts on rising property values.

    Using the calculator on the Genworth site (loan insurers) all our loans are unaffordable and would not be approved. Surely there should be some one checking the accuracy of this calculator and the calculators used by the Banks? The ASIC assumption has been that Bank fraud is rare. This assumption is being shot to pieces and thus ASIC could put its time to good use checking a few disputed loans on the Genworth calculator used to assess LMI at the time of grant, the Bank calculator and the internal Bank calculator. A chat to a CBA Credit Assessor about the use of these calculators would be very useful for all Australians, maybe as part of this and the Banking Inquiry.

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