Unit of Competency Mapping – Information for Teachers/Assessors – Information for Learners

FNSFLIT203A Mapping and Delivery Guide
Develop understanding of debt and consumer credit

Version 1.0
Issue Date: May 2024


Qualification -
Unit of Competency FNSFLIT203A - Develop understanding of debt and consumer credit
Description
Employability Skills
Learning Outcomes and Application
Duration and Setting X weeks, nominally xx hours, delivered in a classroom/online/blended learning setting.
Prerequisites/co-requisites
Competency Field
Development and validation strategy and guide for assessors and learners Student Learning Resources Handouts
Activities 		Slides
PPT 		Assessment 1 Assessment 2 Assessment 3 Assessment 4
Elements of Competency Performance Criteria              
Element: Identify and discuss the role of credit in society
  • The concepts and terminology of credit provided by a financial institute and debt incurred by a borrower are analysed and discussed
  • The historical and current role of consumer credit within Australian society is identified and advantages and disadvantages of credit use are analysed and discussed
  • The impact of consumer debt on the national economy is analysed and discussed
       
Element: Identify and discuss the range of credit options available
  • Types of credit facilities used by businesses are analysed and compared
  • Types of credit facilities used by individuals are analysed and compared
  • Differences between unsecured and secured loans are analysed and discussed
  • Implications of default on secured loans are explained to the client
       
Element: Identify and discuss costs of using credit
  • Fees and costs associated with different types of credit options are analysed and discussed
  • The features and associated risks of fixed versus variable interest rates are analysed and compared
  • Ways to compare advertised interest rates and the effects of fees and charges are analysed and discussed
       
Element: Analyse and discuss the effective use of consumer credit
  • Ways to avoid excessive or unmanageable debt are analysed and discussed
  • Strategies to minimise fees on credit are identified and discussed
  • The importance of meeting minimum payments on credit cards is analysed and discussed
  • Ways to avoid credit card fraud are identified, analysed and discussed
       
Element: Manage personal credit rating and history
  • The role of credit reference agenciesis analysed and discussed
  • The purpose and use of credit reference reports in assessing loan applications is analysed and discussed
  • Implications of establishing a poor credit history are analysed and discussed
  • The right to access and methods of obtaining own credit reference report are analysed and discussed
  • This describes the essential skills and knowledge and their level, required for this unit.
       


Evidence Required

List the assessment methods to be used and the context and resources required for assessment. Copy and paste the relevant sections from the evidence guide below and then re-write these in plain English.

Assessment of performance requirements in the unit should be undertaken in an industry context. The Evidence Guide identifies the critical aspects, knowledge and skills to be demonstrated to confirm competency for the unit. Competency is demonstrated by performance of all stated criteria including the Range of Variables applicable to the workplace.

Overview of assessment requirements

To achieve competency in this unit, a person must be able to demonstrate the following:

ability to analyse and clearly explain the role of credit within the community

ability to analyse and clearly explain the different types of consumer credit options currently available

ability to analyse and clearly explain the associated implications and risks of the various credit schemes available, as well as the implication of establishing a poor credit reference history

Evidence required for demonstration of consistent performance:

Competence in this unit must be assessed over a period of time in order to ensure consistency of performance over the Range of Variables and contexts applicable to the work environment.

Delivery/assessment relationship to other units:

• This unit may be assessed on its own or it may be assessed with other units that cover related skills and knowledge.

• Evidence is most relevant when provided through an integrated activity which combines the elements of competency for the unit, or a cluster of units of competency.

Method of assessment:

• For valid and reliable assessment of this unit, evidence should be gathered through a range of methods to indicate consistent performance.

• Assessment of this unit of competence will usually include observation of processes and procedures, oral and/or written questioning on underpinning knowledge and skills and other methods as required

Context of assessment:

• This unit may be assessed in a formal learning environment, on-the-job or within the environment of a related service provider such as counselling or advisory services.

Resources required for assessment:

• Assessment of this unit of competence requires access to information about current and historic interest rates, information about a wide range of credit products, software and other resources relevant to the unit of competency.

Submission Requirements

List each assessment task's title, type (eg project, observation/demonstration, essay, assignment, checklist) and due date here

Assessment task 1: [title]      Due date:

(add new lines for each of the assessment tasks)

Assessment Tasks

Copy and paste from the following data to produce each assessment task. Write these in plain English and spell out how, when and where the task is to be carried out, under what conditions, and what resources are needed. Include guidelines about how well the candidate has to perform a task for it to be judged satisfactory.

This unit covers the knowledge and skills required to understand the functions and implications of different forms of credit and the strategies and methods to make appropriate and effective decisions regarding the management of personal debt and the use of credit facilities.

This is a new unit designed to enhance consumer financial literacy.

This unit has wide application and may be used in workplaces, schools, adult & community learning organisations or registered training organisations in order to build the financial literacy of learners. The unit may also be used as part of pre-vocational or new apprenticeship programs or as part of services provided by counselling or advisory organisations.

Unit Sector

No sector assigned

ELEMENT

PERFORMANCE CRITERIA

1. Identify and discuss the role of credit in society

1.1 The concepts and terminology of credit provided by a financial institute and debt incurred by a borrower are analysed and discussed

1.2 The historical and current role of consumer credit within Australian society is identified and advantages and disadvantages of credit use are analysed and discussed

1.3 The impact of consumer debt on the national economy is analysed and discussed

2. Identify and discuss the range of credit options available

2.1 Types of credit facilities used by businesses are analysed and compared

2.2 Types of credit facilities used by individuals are analysed and compared

2.3 Differences between unsecured and secured loans are analysed and discussed

2.4 Implications of default on secured loans are explained to the client

3. Identify and discuss costs of using credit

3.1 Fees and costs associated with different types of credit options are analysed and discussed

3.2 The features and associated risks of fixed versus variable interest rates are analysed and compared

3.3 Ways to compare advertised interest rates and the effects of fees and charges are analysed and discussed

4. Analyse and discuss the effective use of consumer credit

4.1 Ways to avoid excessive or unmanageable debt are analysed and discussed

4.2 Strategies to minimise fees on credit are identified and discussed

4.3 The importance of meeting minimum payments on credit cards is analysed and discussed

4.4 Ways to avoid credit card fraud are identified, analysed and discussed

5. Manage personal credit rating and history

5.1 The role of credit reference agenciesis analysed and discussed

5.2 The purpose and use of credit reference reports in assessing loan applications is analysed and discussed

5.3 Implications of establishing a poor credit history are analysed and discussed

5.4 The right to access and methods of obtaining own credit reference report are analysed and discussed

This describes the essential skills and knowledge and their level, required for this unit.

Knowledge requirements include:

• principles of lending/credit

• role of credit in society

• understanding of the financial institutions, regulatory bodies, credit reference agencies and consumer advisory bodies that are involved in the provision and management of credit

Skills requirements include:

• communication skills including active listening and the ability to provide explanations of complex concepts in plain language

• numerical and mathematical skills are relevant to calculations of interest and loan repayments

The Range Statement relates to the unit of competency as a whole. It allows for different work environments and situations that will affect performance.

The following variables may be present with training and assessment depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts. If bold italicised text is shown in Performance Criteria, details of the text are provided in the Range Statement.

The role of consumer credit includes:

• enabling approved applicants the ability to purchase items (goods and/or services) where the cost of the item exceeds current savings available

Advantages and disadvantages of credit may include:

Advantages:

• obtain and can use purchased item immediately

• minimises the need to carry cash or write cheques

• allows for instalment payments on expensive items

• convenient form of payment when travelling, especially overseas

Disadvantages:

• may increase cost of items purchased due to interest accrued

• usually attracts other fees such as account servicing fees

• can lead to compulsive buying habits

• creates a false sense of wealth

Consumer credit facilities may include:

Fixed:

• personal loans

• leases including mobile phones, cars, business premises, office equipment including personal computers

• hire purchase

• 'buy now, pay later' schemes

Revolving:

• credit cards

• store cards

• overdraft

Differences between unsecured and secured loans include:

• a secured loan is supported by an underlying asset while an unsecured loan is not

• unsecured loans attract higher interest rates due to increased risk to the lending institution

Implications of default on secured loans include:

• repossession of the underlying asset by the lending institution

• any shortfall in sale of reposed asset against outstanding loan amount must be paid by borrower

Fees and costs associated with different credit options may include:

• loan establishment fees

• credit purchase fees

• late payment fees

• account servicing fees

• withdrawing from a foreign Automatic Teller Machine (ie. the ATM of a lending institution other than your own)

Fees and costs may be analysed and compared using:

• software applications such as Excel

• online, web based, calculation tools

• manually, comparing fees and costs drawn from tables and charts provided by financial institutions and analysed using a calculator

Ways to compare advertised interest rates may include:

• informing the client of the 'comparison rate' which includes all associated fees and charges

Strategies to minimise fees on credit may include:

• paying the minimum monthly instalment on time

• know how many free transactions come with the card

• consolidating savings and credit facilities with the one institution where account servicing fees can be cancelled out

Ways to avoid credit card fraud include:

• not disclosing Personal Identification Number (PIN) to anyone

• selecting a PIN only the card holder would know

• signing the back of the credit card

Credit reference reports refers to:

• reports established and maintained by credit reference agencies which record all negative events (ie. defaults) listed by creditors against debtors

Implications of establishing poor credit history may include:

• inability to obtain finance in the future

• necessity to obtain guarantor in future loans

• higher interest rate penalties

• may disadvantage applications for rental accommodation

Methods of obtaining own credit reference file may include:

• writing, emailing or telephoning the relevant agency requesting a copy of your file, having provided relevant details to identify self

Copy and paste from the following performance criteria to create an observation checklist for each task. When you have finished writing your assessment tool every one of these must have been addressed, preferably several times in a variety of contexts. To ensure this occurs download the assessment matrix for the unit; enter each assessment task as a column header and place check marks against each performance criteria that task addresses.

Observation Checklist

Tasks to be observed according to workplace/college/TAFE policy and procedures, relevant legislation and Codes of Practice Yes No Comments/feedback
The concepts and terminology of credit provided by a financial institute and debt incurred by a borrower are analysed and discussed 
The historical and current role of consumer credit within Australian society is identified and advantages and disadvantages of credit use are analysed and discussed 
The impact of consumer debt on the national economy is analysed and discussed 
Types of credit facilities used by businesses are analysed and compared 
Types of credit facilities used by individuals are analysed and compared 
Differences between unsecured and secured loans are analysed and discussed 
Implications of default on secured loans are explained to the client 
Fees and costs associated with different types of credit options are analysed and discussed 
The features and associated risks of fixed versus variable interest rates are analysed and compared 
Ways to compare advertised interest rates and the effects of fees and charges are analysed and discussed 
Ways to avoid excessive or unmanageable debt are analysed and discussed 
Strategies to minimise fees on credit are identified and discussed 
The importance of meeting minimum payments on credit cards is analysed and discussed 
Ways to avoid credit card fraud are identified, analysed and discussed 
The role of credit reference agenciesis analysed and discussed 
The purpose and use of credit reference reports in assessing loan applications is analysed and discussed 
Implications of establishing a poor credit history are analysed and discussed 
The right to access and methods of obtaining own credit reference report are analysed and discussed 
This describes the essential skills and knowledge and their level, required for this unit. 

Forms

Assessment Cover Sheet

FNSFLIT203A - Develop understanding of debt and consumer credit
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Assessment Record Sheet

FNSFLIT203A - Develop understanding of debt and consumer credit

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