ASIC has revealed plans to undertake a review of mortgage brokers in regards to interest-only lending.
Speaking at the FBAA
conference held in the Gold Coast on Friday, ASIC senior executive leader – deposit takers, credit & insurers, Michael Saadat, said the regulator would turn its focus to mortgage brokers following its recent review of banks in regards to interest-only lending.
“Going forward we intend to undertake a further review in the interest-only area moving on from lenders to brokers with a particular focus on brokers’ consideration of consumer requirements and objectives,” he said.
“To share some feedback we have gotten from lenders and brokers in this space – and I will try and be completely open with you – ever since publishing our report on interest-only loans and getting the lenders to agree to make the necessary changes, I keep getting asked by lenders what is ASIC doing to make sure brokers will also make changes to their processes.
“When I have spoken to brokers, I’m asked what is ASIC going to do to hold lenders to the same account as brokers.”
However, Saadat said it is important to remember that both lenders and brokers have their own separate responsible lending obligations to uphold.
“Lenders seem to be worried that by raising the bar on the information they require brokers to collect from consumers that brokers will shift business to lenders who need less information.
“Brokers also tells us that the information ASIC says needs to be collected, for example information about a consumer’s requirements and objectives, is information that brokers are already collecting as a part of their normal process with their clients.
“It is important to remember that both lenders and brokers separately have responsible lending obligations to meet. It is not good enough for a lender to point the finger at brokers and it is not good enough for a broker to point the finger at lenders.”