Broker registration starts today

A three-month window opens today for people or organisations in the consumer credit market to register with the Australian Securities and Investments Commission to operate under the new National Consumer Protection regime.

Registration is an intermediate step and from July 1 registered individuals and organisations will be able to apply for their Australian Credit Licence. Anyone who has not applied for a licence by December 31 will have to stop offering consumer credit products or advice.

Speakers at yesterday's Mortgage Innovation conference said the introduction of the new regime was an occasion for them to review their operations and look at how the licensing regime might give them new opportunities.

Mortgage Choice chief executive Michael Russell said his group has, for some time, been looking at giving its franchisees a wider suite of products that included insurance.

Russell said the new regime would make his brokers "professionals on the liability side."

The chief executive of the Mortgage & Finance Association of Australia, Phil Naylor, cautioned that holding a licence did not provide a competitive advantage.

Naylor said: "It is a ticket to the game. What the legislation does do is make brokers professional credit advisers. Brokers can come out of the closet and give advice."

There were different views about how far that advice-giving would extend.

The head of partnerships at St George, Shane Davis, said he was aware of broker groups that were looking at giving advice on the wealth management side of the business.

Aussie chief executive Stephen Porges said licensing would turn the company into a general practice retail financial services business with an advisory model.

He said most people had to go to highly qualified financial planners to get simple advice. There was a gap in the market for a good value advice service and Aussie was looking at that.

Russell said he did not see the opportunity extending that far. "NCCP makes our industry professional on the liability side of the balance sheet. We are talking about loans and complementary products. We are not looking at advice on the asset side."

NAB Partnerships executive general manager Matt Lawler said: "It will evolve. There will be different models. The more successful groups will have wider models.

"In 1986 life insurance agents sold two products - term life and whole of life. None of them could have imagined that they would turn into financial planners advising on the range of products they cover today."

Lawler said licensing would put the onus on brokers to "get it right" but it also provided opportunity because it would give lenders the confidence to empower accredited brokers.

Lawler said: "Homeside had a 200 per cent increase in demand over a three-week period in January, following Westpac's decision to increase its variable rate by 45 basis points.

"We were caught short. Having the flexibility to meet changes in demand is our biggest challenge. We can do that better if we resource brokers to do more.

"We have had a look at getting our top brokers to do credit approvals. Some of them had been working with Homeside for 10 years."

Russell said he was not keen for Mortgage Choice brokers to have that sort of discretion

However, Lawler and Davis said credit approval could be part of the broker segmentation process and some brokers would want to do it because it would increase their earnings.