The MFAA has issued a submission to ASIC in relation to the banning of brokers’ use of the words ‘independent’, ‘impartial’ or ‘unbiased’ in their names.
The new legislation, which follows the passing of the National Consumer Credit Legislation Amendment (Enhancements) Act 2012 last year, prohibits the use of the terms unless ‘no commission or other benefits are being received directly or indirectly from lenders and lessors’.
While the law changes don’t come into play until March 1, the MFAA is concerned some brokers won’t have enough time to change their business names and could end up facing legal repercussions.
MFAA CEO Phil Naylor says most of the changes listed as part of the Act were expected following the general enactment of the NCCP, but says he’s concerned that some brokers haven’t been given enough advance warning.
“There have been some broking companies who used the words in their name. We’re having discussions with ASIC now to see if they’re willing to give brokers with ‘independent’ in their name a bit more time, but we’re still waiting for a response. There seems to be a view that it is a costly process to change your name, so we’re seeing if ASIC are willing to give some exemptions.”
Naylor says the MFAA is hoping for a response from ASIC shortly, but says he’s not sure how much of an extension – if any – they will be willing to give.
“The first of March is still the deadline, but we put a proposition to ASIC basically saying we told all our members this and identified a few that use the word, and is ASIC willing to provide some kind of exemption, but we haven’t put a time on it. If they are, then I think we can be more specific.”
As well as regulating the use of certain terms in mortgage broking business names, the new legislation also affects reverse mortgages, SACC’s and provisions about hardship and default.