MFAA seeks more time on ASIC's broker 'independence' ban

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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.

 

 

 

 

 

 

 

 

  • Paul Eldridge on 17/01/2013 7:10:18 PM

    Maria, ASIC are banning the term acting in their capacity as regulator. They can be lobbied to change this.

    A change in government does not mean a change in ASIC
    necessarily. The employees don't leave when the government changes.

    ASIC clearly don't appear to understand market realities. Mobile lenders are not independent as they are selling one banks (their employers) product. Brokers are not employed directly by the bank and are therefore independent of a direct relationship. What ASIC need to do is change this directive to - if you claim to be independent you must meet X criteria.

  • Maria Rigoni on 15/01/2013 5:15:09 PM

    As voters we can elect government representatives who are feed up with the status quo and are prepared to push to ensure our laws are good effective laws that do what they say they do.
    I have joined the Bank Reform Party brp.org.au. It would be great to see other brokers supporting the movement.

  • Damien on 15/01/2013 1:38:43 PM

    And the stupidity continues, there is something seriously wrong with this nanny/mothering government. I cannot wait till November when we see them thrown out, as they have set this country back 10 years and achieved very little, if anything.

  • Lyn Turner on 15/01/2013 12:38:13 PM

    You have had the opportunity to join with other organisations to fight this legislation and have done nothing until now. Too little, too late!

  • David on 15/01/2013 12:02:41 PM

    The real issue is the MFAA's ineptitude in addressing this before it became legislation. If the MFAA was doing its job and had established a credible working relationship with ASIC and Treasury, it would have been involved in assisting to frame the new legislation to ensure its members' interests were protected. It is apparent from this, and events in the past, that the MFAA has become reactionary to legislative changes after all the talk and drafting has been completed. It now appears that there is nothing we can do to change this piece of bureaucratic nonsense, but no doubt MFAA will, true to form, claim a 'victory for members' if ASIC hands it a crumb and concedes a delay for a month or so. There will be times when no amount of lobbying will change the government's view, but this relatively minor issue in the whole legislative landscape does point to the need for a stronger representational body that is not only be heard by the legislators, but also listened to.

  • Trent Lee - bSmart on 15/01/2013 11:35:16 AM

    Maybe Phil Naylor should have been more pro-active.

    I spoke to Phil about Independent Mortgage Broking back in 2004 when we launched bSmart Australia's first Independent Mortgage Broker. Phil thought it was a good idea for the consumer back then.

    How much more time do you need Phil?

    Trent Lee - bSmart

  • Maria Rigoni on 15/01/2013 10:27:16 AM

    ASIC is the regulator, not the law maker. They are merely fulfilling their role as watchdog.

    It is the law that needs changing as it is just bad, misleading legislation that offers no real protection to Australians.

    The protected "financial counsellor" under this legislation is the good guy and the mortgage brokers are the bad guys.

    The word commission needs to be banned as it is used to mislead the Australian public into a thought that mortgage brokers are paid "excessive" remuneration, which those that are employed in the industry know is utter crap!

    Let's compare a loan writers hourly remuneration rate to that of Wayne Swan, Bill Shorten or Penny Wong.

    The moneys paid by the banks to the mortgage managers and loan writers is gross business turnover and not 'happy play, bonus money'.

  • Paul Eldridge on 15/01/2013 9:48:37 AM

    ASIC's decision to ban the word 'independent' is wrong. It demonstrates beauracracy not understanding business.

    Mortgage brokers who truly provide access to a range of lenders are acting independent of any one lender.

    This is a nonsensical approach from ASIC.

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