FBAA agitates over onerous broker reforms
The Finance Brokers Association of Australia is continuing to speak plainly about its dissenting views on the disorganised march toward the introduction of national regulations that would govern the conduct of mortgage brokers.
Peter White, national president of the FBAA, said the Finance Brokers Draft Bill, published in late November, "creates a ludicrous and and anti-competitive environment.
"It is creating an unfair playing field in what a broker has to do compared to a bank (for a loan), which is virtually nothing, and is just completely anti-competitive.
"A broker representing a bank has to produce a pile of paperwork just to get started, yet a customer can walk into the same bank and get it done over the counter, no questions asked.
"Another issue is the bank staff may not have the appropriate education or training background to be lending, whereas the brokers have certain educational requirements in place, including external dispute resolution."
The draft bill, prepared by the New South Wales Office of Fair Trading following drawn out national consultation, proposes that all broking structures will be regulated, including mortgage brokers, finance brokers, single line broking, single mobile operators, aggregators and franchised organisations.
The chief innovations are those that tackle the responsibility of those brokers contributing to the problem (such as it is) of predatory lending.
The wider burden for all brokers is the need to adjust practice to prepare a statement of needs. Whether this will be a trivial piece of paperwork of low value to the client or a time consuming and expensive service analogous to a financial plan may be the key issue in these proposals.
Lenders won't be subject to corresponding regulations such as the requirement for a statement of needs, at least not under this proposal.
The FBAA's Peter White contended that there has been a lack of consultation in the market place, with the main people consulted focused on the home lending arena.
"We have a much more diversified membership group under us including plant and equipment financing, vehicle financing and so on.
"Our greatest concern is that the consumer will be protected by the legislation.
"There is a lack of practical application going on behind the bill".
The FBAA represents 9000 brokers. A recent survey of members, publicised yesterday, identified that 88 per cent of brokers believe the proposed legislation will not safeguard consumers; 91 per cent said it will fail to rid the industry of unscrupulous operators; and 92 per cent support national licensing under the Australian Securities and Investments Commission as the preferred regulatory model.
The Productivity Commission, a different federal quango, in December recommended the transfer of consumer credit regulation from state and territory governments to the Australian government "without further review".
The Productivity Commission made clear that it proposed only one new regulation in relation to the consumer finance arena, which is to require brokers to offer consumers access to an ASIC-approved dispute resolution process (and which most brokers do in any event).