Mr and Mrs X applied for a low doc loan from a financial service provider (FSP) to refinance an existing loan and to obtain additional finance of $200,000 to assist them to purchase another property. Mr and Mrs X disclosed in their application: partnership income of $400,000, rental income of $40,000 and a parenting allowance of $20,000. The FSP approved their loan based on their income as disclosed in the application and their declaration that the loan was within their ability and capacity to service. The FSP did not make any independent enquiries to verify the application information.

Identify and explain 2 duty of care considerations the FSP should have displayed in assessing the applicants' capacity.

(Explain compliance issues relating to: duty of care principles).