Bring it on, says broker association

by Julia Corderoy17 Nov 2015
The FBAA has welcomed the latest ASIC review, which will investigate brokers’ consideration of consumer requirements and objectives when it comes to interest-only lending.

Yesterday, Australian Broker broke the news of ASIC’s plans to undertake a review of mortgage brokers in regards to interest-only lending, after ASIC senior executive leader – deposit takers, credit & insurers, Michael Saadat, told brokers at the FBAA conference on Friday that the regulator would be shifting its focus from lenders to brokers. 

The chief executive of the FBAA, Peter White, has now responded, saying that it is only fair brokers are also investigated, however, he says ASIC must remember that it is the lenders who ultimately write the rules – not the broker.

“Lenders make the loan and lending rules that brokers must follow and in line with the brokers own responsible lending obligations, the vast majority are not intentionally breaking the law and are applying responsible lending considerations to the loans they arrange for borrowers,” White said.
 
In his address, Saadat also raised concerns about consequences when brokers shifted business towards lenders who require less information and checks, however, White has dismissed those concerns.
 
“At all times, brokers have the borrowers best interests at heart while also being aware of the borrowers desires which are not the influencing factor as they are not always in line with responsible lending obligations.”
 
White is now reminding brokers to remain open, professional and transparent about the forthcoming review. 

“This is all about education on both sides but from our end, it is vital we continue showing them how we work and the practices we have in place to eliminate any need for potential restrictive or more stringent regulation,” White said.
 

COMMENTS

  • by GC 17/11/2015 9:54:51 AM

    What is Michael Saadat and ASIC, in general trying to prove? What does he really have against I/O loans? Does Mr Saadat think he knows more than the brokers? Does he actually understand that I/O loans actually decrease borrowing capacity? Does he understand that there are multiple reasons for structuring finances with I/O loans?

    Maybe he has been burnt by a bad broker. What ever the issue is, its a pity that we have a Lawyer instead of a finance professional overseeing compliance in the finance industry and seemingly pushing his PERSONAL views.

    My real concern is that ASIC think they should have the power to tell us how we should be structuring our finances. If that is the case we are entering dangerous territory. The last I knew we apparently have the freedom and choice to make our own financial decisions - without Govt interventions- as we have in the past. Do we now have ASIC thinking they are superior? Seems so.......

  • by Broker 17/11/2015 10:24:10 AM

    Is this interest only witch-hunt coming from the same peanut that recently suggested that brokers write interest only to get paid more trail – wow like imagine earning an extra 3% on your annual trail each year , early retirement here I come!

    I try to have some form of respect and understanding for the likes of ASIC and APRA’s decisions on what to monitor in the lending space – but they make it impossible as the majority of their commentary is stupider than their previous thought bubble.


  • by John Sanders 17/11/2015 2:48:52 PM

    I agree with you GC perhaps the head honchos at ASIC and APRA should do their Cert 4 in Finance so they at least have some basic understanding of what it is they are investigating!

    You're 100% correct when you say IO loans are actually harder to get. I have noticed a new attitude from assessors who are scrutinising investment loans far more.

    Some of the declines I have had of late are nothing short of absurd!

    Does APRA actually think we would be trying persuade our clients to go down this path?