A leading solicitor is urging brokers to check their professional indemnity insurance and fidelity insurance policies to ensure they are covered under changes to verification of identity (VOI).
Under Version 3 of the Australian Registrars’ National Electronic Conveyancing Council's (ARNECC) participation rules, in order to meet safe harbour requirements to conduct VOI procedures on behalf of a lender, Jon Denovan, a partner at Gadens law firm told Australian Broker
that mortgage and finance brokers must ensure their insurance policies are amended.
“Each finance broker is going to have to check with their insurance broker that their policy covers the verification of identity (VOI), which it might not specifically. They will also need to check that their insurance covers fidelity insurance. If brokers do that, they will be eligible to conduct VOI within safe harbour,” he said.
Denovan said it isn’t likely to cost a broker any more money to update their insurance, as VOI has always been a part of a broker’s job, however they will need to ensure that their policy is amended to contain a specific clause relating to VOI in writing.
“I expect it wouldn’t [cost more money] because brokers have been verifying people’s identity for banks forever, it has been part of the brokers job. So, their insurer will likely say to them that they are already covered. If that is the case, then that is good.
“However, under the changes, it is possible that banks will ask to see a policy or endorsement which specifically mentions VOI. If I was a broker I would be getting a letter from my insurer to confirm I am covered for VOI.”
According to Denovan, these changes will come into effect in the second week of November.