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MFAA Prosper : Mortgage and Finance Brief 14
Mortgage & Finance brief 13 Phil Naylor, the CEO of the MFAA, has called for a slowdown on regulatory reform to give brokers the time to adjust to the raft of legislation that has been int roduced over the pa st 18 months. Over recent times, brokers have had to implement an array of legislation, including credit guides, fact find docu ments, ver ification checklists, preliminary assessments, quotes and credit proposal disclosure documents, which carry with them considerable compl ia nce co st s. A nd Naylor now believes enou gh is enough. “The MFAA has been a strong supporter of enhanced regulation in the credit sector, but it is essential that the rate of change to regulation is now slowed to allow the market to have commercial certainty and for new businesses to plant green shoots. ASIC need s to step back now, and not try to find problems to fit solutions i nto.” Brokers are in broad agreement with Naylor’s com ment s. David Jack son of Grea t Aussie Drea m, Glen more Pa rk, NSW, sees the bene fits of the legislation but agrees that it now needs to be left alone and given time to bed dow n. “We have gone to great lengths to be Call for slowdown on reform cosL sees upturn in financial hardship Financial hardship cases continue to dominate the activity of the Credit Ombudsman Service Limited (COSL), according to its Annual Report on Operations – and the dispute resolution organ isation doe sn’t see that changing any time soon. There was a 72% (almost 2000) rise in the number of cases reported to COSL in 2011, and a membership increase of 22%, bringing numbers up to 16,600. The increase in complaints was attributed to increasing awareness in COSL’s services, while the surge in membership numbers was put down to Com monwealth legislation requiring financial service providers to join an alternative dispute re solution sche me. Raj Venga, the Credit Ombudsman, said “34% of all complai nt s we receive relat e in some way to financial hardship. This level of financial hardship complaints is similar to prev ious years and we do not anticipate a reduction in the foreseeable future.” Asic action Nova Home Loans of Sydney has had its credit licence revoked by ASIC after failing to be part of a dispute resolution scheme. The compa ny had been expelled by the Financial Ombudsman Service last year, and had subsequently failed to obtain membership of COSL. Meanwhile, Com monwealth Ba nk has accepted an enforceable under taking from ASIC over m isleading messages sent to customers in December 2011. CBA sent customers a message suggesting that if they did not urgently agree to receiving a credit-card limit increase, they could miss out. ASIC judged the message m isleading, as customers can apply for a credit card limit increase at any time. Regulations introduced on 1 July restrict lenders sending unsolicited of fers of a credit card limit increa se. compliant with the legislation and there have definitely been additional costs, but overall there are benefits in going through the process, and it has been a good exercise for the industry. “However, it is far too soon to be contemplating further regulatory changes, because it is too early to be able to properly assess the f ull impact of the legislation.” Ruan Burger of Home Loans etc in Gladstone, Queensland, says that, at this stage, bedding down the legislation is still a bit hit and miss and there are still issues to work out. “Everything takes time and requires some trial and error to get on top of it. All brokers need time to work out exactly what to do.” “I feel caught in the middle bet ween the regulator and the banks. It is the banks that decide what kind of loan they will allow, not the broker, and yet most of the complia nce requirements are placed on the brokers. I also think that the Government itself is feeling its way as wel l as brokers,” he said. However, broker s with la rg er broking firms are finding fewer difficulties with implementation of the legislation. Matthew Rose, a SA-based Aussie broker with over 600 clients, reports that there has been a fairly minimal effect at his level. “Although there has been some extra work in updating infor mation, Aussie has handled all of the transitional arrangements at a cor porate level,” he s aid. it is essential that the rate of change to regulation is now slowed to allow the market to have commercial certainty and for new business to plant green shoots. thinkstock
Mortgage and Finance Brief 13
Mortgage and Finance Brief 15