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MFAA Prosper : Mortgage and Finance Brief 13
Mortgage & Finance brief 51 declined membership application due to previous bankruptcy A State Council had declined an application for membership, as it was concerned about the applicant’s failure to manage his debts satisfactorily. He had been declared bankrupt six years previously, but had been discharged three years later. The Tribunal shared the Council’s concern about the applicant’s failure to manage his personal finances appropriately but, after a close examination of the circumstances, concluded that these were sufficiently exceptional to justify allowing him to be admitted as a member. The Tribunal noted the bankruptcy came during a period of emotional distress occasioned by a marital break up and was initiated on the advice of a community legal centre, even though the amount of the indebtedness was less than $20k. Since being discharged he has had no further financial difficulties and has been in steady employment. The applicant was admitted to membership on the following conditions: • He is to be mentored for 24 months by an MFAA member of five years’ standing. • The mentor is to keep a written log of the member’s activities in accordance with MFAA mentoring guidelines, and is to provide a copy quarterly to the State Council for a period of 24 months. • If he is found to have engaged in any conduct in breach of the MFAA Code or Disciplinary Rules within 12 months, his membership will be immediately cancelled. ••• the lessons to Be learnt By clairE WivEll platEr These decisions show that MFAA members can be disciplined even if their conduct has nothing to do with advice and assistance provided to clients. Can a bankrupt be a mortgage broker? This case raises an interesting issue about whether brokers can provide mortgage services if they are bankrupt. The State Council decided that a broker who had been discharged from bankruptcy three years earlier should not be allowed to be a member of the MFAA. The Tribunal allowed the membership, but only under certain conditions. The Tribunal was more restrictive than the NCCP Act. Under the Act, an undischarged bankrupt can provide credit services, provided they are not a director, secretary or a senior manager of an ACL Licensee. If a director, secretary or a senior manager of an ACL Licensee becomes bankrupt, ASIC can suspend or cancel the ACL Licence. Brokers cannot provide credit services if they have been convicted of serious fraud in the past 10 years. Neither can a person who has been banned or disqualified by ASIC under the NCCP Act or under a law of a state or territory. When will a person’s reputation impact on an ACL licence? ASIC is unlikely to grant a licence to a company if any of its directors, secretary or senior managers have been banned or disqualified from providing a credit service under the NCCP Act or other state or territory legislation or under the Australian financial services laws. Other reasons for refusing a licence include where a director, secretary or a senior manager has been disqualified from managing a company or has incurred a criminal conviction within the past 10 years. ASIC can also refuse a licence if one of the directors, secretaries or senior managers is not a ‘fit and proper person’. claire Wivell plater is Managing Director of Gold seal risk Management services Case 2 ABN: 43 082 270 406
Mortgage and Finance Brief 12
Mortgage and Finance Brief 14