MFAA welcomes ASIC interest only findings

by Phil McCarroll16 Sep 2016
The Mortgage & Finance Association of Australia (MFAA) has welcomed the findings of a review into interest-only lending by the Australian Securities & Investment Commission (ASIC).

ASIC released the findings on Wednesday, which stemmed from the regulator reviewing the actions of 11 major mortgage broker in regards to interest-only loans from over the second half of 2015.

MFAA chairwoman Cynthia Grisbrook said the ASIC findings, which included the fact that interest-only lending accounted for just $35.6bn in the June 2016 quarter compared to $44bn in the June 2015 quarter, shows that brokers are being responsible when it comes to interest-only lending.

“The report supports the positive impact that brokers have on providing credible credit advice to consumers by ensuring that interest-only loans are only offered after the strictest of compliance standards are met,” Grisbrook said.

“These standards require that a broker conducts a full needs analysis and fully explains the nature of the product prior to it being offered as an option,” she said.

While Grisbrook said brokers are having a positive impact, ASIC said it will be looking for further improvement from brokers around areas such as explanation of interest only loans, better record keeping and more thorough loan applications.

“ASIC is pleased that our concerns about interest-only loans and responsible lending are being acted on by the home lending industry, but there is still room for improvement,” ASIC deputy chairman Peter Kell said.  

Though she believes brokers are doing the right thing by borrowers, Grisbrook did say they should take the ASIC findings as a reminder to ensure they understand compliance requirements.

“The ASIC report is a timely reminder to all our members to ensure that they are up to date on the compliance requirements as they relate to interest-only loans, to ensure they are providing the correct credit advice,” she said.

The MFAA also said it will be distributing an up to date set of guidelines to refresh members on their compliance requirements.