# "Standard" vs "Non-Standard" margin lending facilities - how do they differ?



## Toeknee (25 October 2012)

Since the GFC we have had the Ripoll report then FOFA. We've had many recommendations of that report implemented.

The new "Responsibile Lending" provisions and licencing in RG203 and RG209 outline that all credit providers giving loans or loan advice to people need to be licenced and that they must consider their ability to repay/service the facility in the event of a margin call.

All this was brought about mainly because of Storm Financial and the CBA not contacting customers in time when their margin calls hit.

Now that has set the scene, can someone please outline the differences between a "Standard" and "Non-Standard" margin lending facility?

How would you establish a suitable margin loan for someone?


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## Country Lad (26 October 2012)

Toeknee said:


> Now that has set the scene, can someone please outline the differences between a "Standard" and "Non-Standard" margin lending facility?




The 'non standard margin lending facility' is targeted at type of margin loan facility used by lenders such as Opes Prime and Tricom, that caused the problems in late 2008. These are not based on a loan agreement, but instead use a type of securities lending agreement to achieve a similar economic outcome as a standard margin loan.  The key difference is that in a non-standard margin loan the title to the security provided for the loan passes out of the client's hands.



> The Act classifies margin lending facilities into standard and non-standard facilities.
> 
> *Standard facility*
> 
> ...




http://www.professionalplanner.com.au/magazine-2/adjusting-to-the-new-margin-lending-regime/


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## Toeknee (27 October 2012)

Thank you, link was exactly what I was looking for.

So basically a non-standard margin loan is one where title passes to the loan provider. I can't think of any situation where this would be a preferred option.

Can anyone shed some light on when you would enter a non standard margin loan?


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