Last updated: December 2023 | ACN 632 194 855 | ACL 520712
Spark Finance Target Market Determination
This Target Market Determination (TMD) has been prepared in accordance with the Corporations Act 2001 (Cth) and associated Regulations. TMDs are designed to assist issuers and distributors to ensure that financial products are distributed to the appropriate target market. This TMD is general in nature and should not be construed as financial advice. Consumers should obtain independent advice prior to acquiring the product to ensure it is appropriate for their particular objectives, financial situation and needs.
Who is this Product Suitable For?
The product is suitable for customers who meet the following general eligibility criteria:
- Minimum age of 18 years
- Enrolled or planning to study at an approved university
- Stable source of income, earning more than $30,000 p.a. from employment
- Australian citizen, permanent resident, or eligible visa holder
- Good credit history
- Loan purpose is for study (student loan)
Needs and Objectives of the Student Loan
The product is designed to meet the needs of customers looking to fund education at an approved university. The typical customer has an income and expenditure surplus and can afford repayments over time but requires funds in the short term.
Key factors customers consider when applying:
- Interest rates, associated fees, and consistent repayments
- Flexibility to pay out the loan early
- Ease of application and time to approval
- Repayment schedule and grace period
- Brand trust
Unsecured Student Loan Product Features
The key product features are:
- Borrow between $3,000 and $150,000
- Choose between loan terms of 2 to 10 years and either monthly or fortnightly repayments
- Risk-adjusted pricing, based on the customer’s credit profile
- Fees include an establishment fee (included in the total loan amount) and relevant dishonour fees
The product meets customers’ needs through the following key benefits:
- Access a rate quote and self-determine suitability prior to a formal application
- Fixed repayments and rate over the lifetime of the loan
- Early repayment with no penalty fees
- No ongoing monthly fees
- Direct debits can align to the customer’s pay cycle
- Fully digital application process
Potential Risks and Controls
Product affordability is assessed at the time of application to ensure the loan is affordable at origination by:
- Complying with responsible lending obligations
- Reviewing bank statements to verify income, expenses and liabilities
- Performing a credit file check to confirm liabilities and repayment history
- Assessing serviceability and product suitability
The potential for a customer to misrepresent their financial needs is controlled by:
- Reviewing bank statements to verify income, expenses and liabilities
- Performing identity and fraud checks
- The verification of income with the customer’s bank or through payslips
A customer’s inability to meet financial obligations due to financial hardship is managed through hardship arrangements made available to customers. Changes in a customer’s needs during the life of the loan are managed through the ability to pay out the loan early with no penalty, the option to refinance with another provider, and available hardship arrangements.
Common Reasons a Customer May Not Proceed
Customers may not be satisfied with the quote element of the product because:
- Due to the use of risk-adjusted pricing, the advertised interest rate may be lower than the rate quoted to the customer
- The application may be declined
Typical Complaints
Customers may not be satisfied with the product due to:
- The fees or interest charged when payment obligations are not met
- The options available for changing loan repayments (varying the contracted repayment amount or frequency)
- The credit enquiry recorded on the customer’s credit file
- Accessibility to account and payment change information
Spark Finance measures product performance and customer satisfaction through: the percentage of customers maintaining payment obligations, complaint data including EDR complaints, delinquency and loss rates, and customer feedback.
How is the Product Distributed?
A customer can access an Unsecured Student Loan from Spark Finance via:
- The Spark Finance website
- A referral from third-party partners and websites, often via a link to the Spark Finance website or application form
Review Triggers
- A material change to the product or its distribution
- A significant increase, beyond expected levels, in the volume or nature of complaints, disputes or defaults
- A change in law or its application, a relevant industry code change, an AFCA determination, a court decision, or ASIC or other regulatory guidance that materially affects the product
- Feedback from a regulator or consumer group relating to the suitability of the product or its distribution
Events that would signal a review of this TMD is required include:
- A significant dealing event is defined as selling the product to a segment of customers who fall outside the target market.
Spark Finance will stop distributing its unsecured personal loan if a systemic issue occurs suggesting a breach of core compliance obligations, a cyber security incident results in a compromise of customer data, or funding limitations arise.
How Often is This Document Reviewed?
This document is reviewed at least annually, or earlier if required as outlined above. The last review date was December 2023.
For any questions, contact us at info@sparkfinance.com.au
