Small Amount Credit Contract - Nifty Personal Loans

Target Market Determination

Effective date: 5 October 2021

Prepared by Nifty Loans Pty Ltd (Nifty), ABN 66 630 101 843, Australian Credit Licence number 514 260 (Us, We, Our). This Target Market Determination (TMD) applies to the Small Amount Credit Contract (SACC) product.

 

What is a Target Market Determination?

This TMD describes:

  1. the attributes of the product;
  2. the class of customers that the product has been designed for; 
  3. how the product attributes meet the target market needs;
  4. the product distribution conditions; 
  5. review periods for the determination; 
  6. review triggers for the determination. 

 

Product Key Attributes 

The key attributes of the product are:

  • loan amounts ranging from $500 to $2,000.
  • loan term of 12 months.
  • fixed credit charges of an establishment fee of 20% and a monthly fee of 4% per 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.
  • ready access to customer services and hardship policy.
  • only for personal and non-business purposes. 

 

Target Market 

The class of consumers that is the target market for the product are consumers who:

  • need amounts of between $500 and $2000;
  • need to pay for infrequent or larger than normal, and sometimes unforeseeable expenses that cannot be met from their regular or usual disposable income;
  • want the funds quickly;
  • want the application process to be simple, online, and quick;
  • are not interested in long product term lengths;
  • 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. 

 

Critical Assessment 

In making this TMD, a critical assessment must be made to determine how the product meets the needs of the target market.

Assessment Criteria  Assessment Outcome
Purpose The purpose of the product is to provide loans for infrequent and sometimes unforeseeable expenses that cannot be met by the customer’s regular income.
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: 

  1. the loan amounts are closely related to the amounts required by the target market consumers in their loan applications.
  2. the loan terms are suitable for the consumers’ needs, requirements and objectives, and financial situation.
  3. the loan repayments are affordable for the consumer without hardship.
  4. the application process is online and most are completed within 10 minutes.
  5. an application outcome is provided within 60 minutes in most cases.
  6. the funds are available within 60 seconds after acceptance of the contract by the consumer. 
  7. the contracts are legible and easy to understand, being only 12 pages long in 10 pt. font or larger.
  8. 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.
  9. 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:

  1. low default rates;
  2. few hardship applications;
  3. low numbers of customer complaints;

These indicate 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 months. 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. 
Assessment Criteria: Purpose

Assessment Outcome: The purpose of the product is to provide loans for infrequent and sometimes unforeseeable expenses that cannot be met by the customer’s regular income.

Assessment Criteria: Key Attributes related to the needs, objectives and financial situation of the Target Market

Assessment Outcome: The products key attributes benefit the customer in the target market because: 

  1. the loan amounts are closely related to the amounts required by the target market consumers in their loan applications.
  2. the loan terms are suitable for the consumers’ needs, requirements and objectives, and financial situation.
  3. the loan repayments are affordable for the consumer without hardship.
  4. the application process is online and most are completed within 10 minutes.
  5. an application outcome is provided within 60 minutes in most cases.
  6. the funds are available within 60 seconds after acceptance of the contract by the consumer. 
  7. the contracts are legible and easy to understand, being only 12 pages long in 10 pt. font or larger.
  8. 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.
  9. the customer has an online portal available 24 hours a day, 365 days of the year.
Assessment Criteria: Key Indicators of Product Suitability

Assessment Outcome: Historical data over the last 12 months show that this product has been the subject of:

  1. low default rates;
  2. few hardship applications;
  3. low numbers of customer complaints;

These indicate that the product is suitable for the target market and is meeting the consumers’ needs, requirements and objectives, and financial situation.

Assessment Criteria: Will the product deliver what is promised in the future?

Assessment Outcome: The product term is only 12 months. The product does deliver what is promised over its term.

Assessment Criteria: Does the product need a redesign?

Assessment Outcome: As at the last review, the product did not require redesign.

 

 

Distribution Conditions

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:

  1. no loans to any customer whose only source of income is Centrelink Benefits.
  2. no more than 3 loans to the same customer within a 12-month period. 
  3. no loans to consumers who are already in default to another SACC loan. 
  4. no loans for the purpose of paying regular, ongoing ordinary household expenses. 
  5. no loans for a consumer who is currently in an active part IX debt agreement. 

There is an acceptable compliance allowance of 5% for all the above.

Distribution Channels Distribution channels will all present the product appropriately to consumers in that they:

  1. do not contain any misleading or deceptive conduct.
  2. do not consist of any unsolicited offers of credit.
  3. contain all disclosures required by law.
  4. are, if distributed through any third party, regularly vetted to ensure the above.
  5. if required by law, the subject of written agreements with us. 

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:

  1. no loans to any customer whose only source of income is Centrelink Benefits.
  2. no more than 3 loans to the same customer within a 12-month period. 
  3. no loans to consumers who are already in default to another SACC loan. 
  4. no loans for the purpose of paying regular, ongoing ordinary household expenses. 
  5. no loans for a consumer who is currently in an active part IX debt agreement. 

There is an acceptable compliance allowance of 5% for all the above.

Distribution Channels

Distribution channels will all present the product appropriately to consumers in that they:

  1. do not contain any misleading or deceptive conduct.
  2. do not consist of any unsolicited offers of credit.
  3. contain all disclosures required by law.
  4. are, if distributed through any third party, regularly vetted to ensure the above.
  5. if required by law, the subject of written agreements with us. 

 

Scheduled Reviews

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:

  1. As to what, if any, trigger events have occurred.
  2. Why, if known, that event has occurred and in particular if it is due to an external factor rather than the design and distribution of the product. .
  3. What, if any, action to take in order to ensure compliance with DDO:
    1. No change if all is within the parameters published above; or
    2. The product needs a redesign; 
    3. A new distribution condition is required; or
    4. 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:

  1. One or more terms of the product are altered and we consider that this alteration reasonably suggests that this TMD is no longer appropriate.
  2. 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.
  3. The number of defaults as a percentage of loans increases by 10% in a 3-month period. 
  4. The number of complaints from approved customers as a percentage of customers increases by 10% in a 3-month period. 
  5. The number of hardship applications as a percentage of customers increases by 10% in a 3-month period. 
  6. The number of loans per consumer per year exceeds 3 or more for 5% or more of customers.