A credit repairer has cautioned brokers against using the service for their clients, saying they could find themselves violating NCCP rules.
Oasis Finance Solutions’ Graham Reibelt has warned that brokers who refer clients to credit repair companies could risk putting clients in unsuitable loans. Reibelt said Oasis Finance Solutions briefly offered to take referrals from brokers, but quickly withdrew the service upon receiving legal advice.
Reibelt said credit repair would make it too difficult for a broker to accurately assess a client’s suitability for a loan product.
“To make a decision on one or a range of loan products, all known information about the client's true position and needs must be clearly identified as part of the assessment process. If a broker elects to arrange to have a client's credit history repaired and then not disclose that past history, then a key element will be missing from the assessment process, so any loan selection decision will be tainted,” Reibelt said.
The essence of credit repair, Reibelt said, was to ensure clients became eligible for credit they would not otherwise have been able to secure. Because of this, he cautioned that brokers and lenders should be wary of repairing clients’ credit.
“If the selected loan product would not have been one the client would previously have qualified for, then the broker and or the lender would have breached their obligations under the NCCP to find a product that was not unsuitable,” Reibelt said.
Disclosing credit repair may not be enough either, he suggested. While disclosure of the credit repair would be imperative, Reibelt said it would also defeat the purpose.
“The very essence of the NCCP is disclosure both to the client and to the lender; therefore, to avoid these issues the broker must disclose known information about their client's credit history to the lender. How else can the lender make an informed decision? Clearly by disclosing their client's adverse credit history it will negate any benefit the credit repair may have achieved,” he said.
Reibelt warned that, while there were no risks to credit repair companies taking referrals from brokers, considerable risks existed for the broker.
“The bottom line is brokers should not be referring clients to credit repair companies, the potential risks facing them are too great,” Reibelt said.