FBAA president Peter White has promised disciplinary action against a former NSW President and existing member who was found by ASIC to have acted unconscionably.
ASIC has announced the court decision finding that the Australian Lending Centre Pty Ltd and Sydney Lending Centre Pty Ltd, both owned and controlled by former NSW FBAA president Christopher John Riotto, had placed borrowers in inappropriate and unserviceable loans.
White said it is "unfortunate" that a broker whose company was found to have acted unconscionably was the association's NSW president six years ago. However he said Riotto was no longer active in the FBAA leadership, and action would be taken against Riotto's Australian Lending Centre.
"The FBAA takes anything like this very seriously. We've only just been made aware, but no one is above the code of conduct on this. We have to act in accordance with the code of conduct, and that will result in the termination of membership," White said.
White said the FBAA had been made aware in the past that claims had been brought against the companies, but had previously been informed that the case had been dismissed. He said the FBAA tried to police its membership as much as possible, but that much of its approach had to be "reactive".
"[We police] as much as one can. Unfortunately, with any association that has thousands of members, you can't sit there and watch everyone's businesses 24/7," he said.
Ultimately, White said the industry should see the situation as a sign that ASIC will take serious action against non-compliance.
"I think it's a good lesson to everyone in the marketplace not to be apathetic about their obligations in any form of lending. ASIC aren't playing games, and this is a classic example of how serious they are. Take it as a warning to all," he said.
Federal Court finds against former NSW FBAA head