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MFAA Prosper : Mortgage and Finance Brief 05
Brokers have until 31 December to decide which option to take, as a key component of the National Consumer Credit Protection Act (NCCP Act) takes effect. Own licence: Benefits If you hold your ow n Australian Credit Licence (ACL), you will be in charge of your destiny. "No one will be looking over your shoulder and telling you how, when and what to do with your clients," says Claire Wivell Plater, Director of risk management ser vices company Gold Seal. "You will be free to develop your own branding, ser vice proposition, client relationship management methods and to manage your business as you choose." You will also be free to appoint credit representatives of your choosing to your business (as long as they meet the appropriate legal requirements). This is particularly relevant for large broking businesses with many sub- contractors acting as loan w riters. "If the large broker business is a credit rep, the licensee who appointed the large broker business will need to consent to or directly appoint the sub-contractors," says says Barry Saoud, General Counsel, Aussie Home Loans. "For this reason, it may be better for larger broking businesses to obtain their ow n licence." Own licence: Challenges Holding your ow n licence means you have to know what you are doing: you will ultimately be held responsible for all compliance matters, such as ensuring your business has professional indemnity insurance, docu mentation of risk management processes and training procedures for credit representatives. "Broking business ow ners who operate as ACL holders won't be relying on a third party to keep them, their staff, their infrastructure, and their compliance document templates, and so on, updated," says Kristy Sheppard, Senior Corporate Affairs Manager at Mortgage Choice. "They definitely need time and energy to be more hands on. "ACL holders need to have the knowledge and skills to put in place their ow n formalised compliance, risk management, business continuity and disaster recovery systems as well as keep up-to-date with any regulation changes and updates from ASIC." This means higher costs for licence holders than for credit representatives. "There are explicit costs and implicit costs," says Steve Weston, General Manager -- Broker Platfor ms at Advantedge. Explicit costs include an annual fee to ASIC and professional indemnity premiu ms. Implicit costs include the professional assistance a licensee might need and the opportu nity cost of lost time in front of clients. Own licence or credit rep? The most important business decision you have to make this year is likely to be whether you obtain your own licence or become a credit representative. What are the pros and cons of each? Words Ann-Maree Moodie and Roslyn Atkinson Mortgage & Finance brief | 37 InPractice
Mortgage and Finance Brief 06