Personal Loan (All Other Credit Contract)
Target Market Determination
Effective date: 5 October 2021
Prepared by Noddle Pty Ltd (Noddle), ABN 63 643 806 759, Australian Credit Licence number 526 746 (Us, We, Our).This Target Market Determination (TMD) applies to the Personal Loan product.
What is a Target Market Determination?
This TMD describes:
- the attributes of the product
- the class of customers that the product has been designed for;
- how the product attributes meet the target market needs;
- the product distribution conditions;
- review periods for the determination;
- review triggers for the determination.
Product Key Attributes
The key attributes of the product are:
- loan amounts ranging from $2,000 to $50,000.
- loan terms ranging from 12 months to 36 months.
- a comparison interest rate from 12.05% to 48.00%.
- a fixed annual percentage interest rate from 8.69% to 21.24%.
- a credit charge of an establishment fee ranging from $0 to 1% of the loan amount per contractual month.
- contingency fees of a missed payment fee of $35 and a direct debit cancellation fee of $60.
- transparent, legible and easily understood contract, including financial table and loan terms.
- loans can be secured by a vehicle or unsecured.
- loans can be used for paying out other debts directly or indirectly.
- ready access to customer services and hardship policy.
- only for personal and non-business purposes.
The class of consumers that is the target market for the product are consumers who:
- need amounts of between $5,000 to $50,000.
- need credit to:
- pay for infrequent, and sometimes unforeseeable, expenses that cannot be met from their regular, usual disposable income;
- pay for large discretionary purchases;
- consolidate debts;
- want lower credit fees and charges if they have high credit worthiness;
- want the funds quickly, when compared to traditional lenders such as banks;
- want the application process to be simple, online, and quick;
- are not interested in short product term lengths;
- are willing to use a vehicle as security to increase their chances of approval or decrease their fees and charges;
- can afford the repayments on the product without hardship;
- want product terms that are clear and easy to understand;
- want ready access to customer services to discuss payments, hardship and terms of the contract.
- are borrowing for personal non-business purposes.
In making this TMD, a critical assessment must be made to determine how the product meets the needs of the target market.
The purpose of the product is to:
- provide loans for infrequent and sometimes unforeseeable expenses that cannot be met by the customer regular income;
- provide loans to pay for large discretionary purchases;
- provide loans to consolidate debts.
Key Attributes related to the needs, objectives and financial situation of the Target Market
The products key attributes benefit the customer in the target market because:
- the loan amounts are related to the amounts required by the target market consumers in their loan applications and communications with the consumers.
- the loan terms are suitable for the consumers’ needs, requirements and objectives, and financial situation.
- the loan repayments are affordable for the consumer without hardship.
- the interest rates, credit fees and charges are lower for people with good and excellent credit ratings.
- the application process is online and most are completed within 10 minutes.
- an assessment is started within 60 minutes in most cases.
- the funds are available within 60 seconds after acceptance of the contract by the customer
- the contracts are legible and easy to understand, being only 15 pages long in 10 pt. font or larger.
- there is ready access to customer service from 8 am to 5 pm Monday to Friday and 8 am to 12 pm Saturday with average call waiting times of 30 seconds.
- the customer has an online portal available 24 hours a day, 365 days of the year.
Key Indicators of Product Suitability
Historical data over the last 12 months show that this product has been the subject of:
- low default rates;
- low numbers of hardship applications;
- few customer complaints;
This indicates that the product is suitable for the target market and is meeting the consumers’ needs, requirements and objectives, and financial situation.
Will the product deliver what is promised in the future?
The product term is only 12 to 36 months. The product does not change over the term of the loan. The product does deliver what is promised over its term.
Does the product need a redesign?
As at the last review, the product did not require redesign.
Does the target market need to be narrowed?
As at the last review, the product target market did not need to be narrowed.
The following conditions apply to how the product is distributed.
Responsible Lending Obligations
The product will be distributed in compliance with all responsible lending obligations.
Voluntary Distribution Conditions
The product will be distributed in compliance with the following voluntary distribution conditions:
- no loans to any customer whose only source of income is Centrelink Benefits.
- no loans for the purpose of paying regular, ongoing ordinary household expenses.
Distribution channels will all present the product appropriately to consumers in that they:
- do not contain any misleading or deceptive conduct.
- do not consist of any unsolicited offers of credit.
- contain all disclosures required by law.
- are, if distributed through any third party, regularly vetted to ensure the above.
- if required by law, are subject to an agreement in writing with us.
We will conduct quarterly periodic reviews of this TMD. The responsible manager will conduct all Design and Distribution Obligation (DDO) reviews and report the results of the review to our board of directors. The report must be provided to the board within two weeks of conducting a review and specify:
- As to what, if any, trigger events have occurred.
- Why, if known, that event has occurred and whether it was caused by a factor external to the design and distribution of our product.
- What, if any, action to take in order to ensure compliance with DDO:
- a. No change if all is within the parameters published above; or
- b. The product needs a redesign;
- c. A new distribution condition is required; or
- d. The product must cease to be offered
Other Review Triggers
We will conduct further reviews upon predetermined trigger events. The compliance officer will monitor for the trigger events on a monthly basis. We will review this TMD if the following trigger events occur in relation to this product:
- One or more terms of the product are altered and we consider that this alteration reasonably suggests that this TMD is no longer appropriate.
- Feedback, regulatory orders or directions are received from a regulator or the Australian Financial Complaints Authority (AFCA) which suggest this TMD is no longer appropriate.
- The number of defaults as a percentage of loans increases by 20% in a 3-month period.
- The number of complaints from approved customers as a percentage of customers increases by 20% in a 3-month period.
- The number of hardship applications as a percentage of customers increases by 20% in a 3-month period.