MFAA CEO Phil Naylor has said he expects to find common ground with ASIC in regard to the income verification hurdles brokers need to meet when assessing clients for low-doc loans.
Following its first review of broker adherence to responsible lending guidelines, ASIC said last week low-doc brokers need to go further than simply gaining an accountant's letter, by verifying the actual level of regular income as well as the basis on which the income statement is made.
Speaking with Australian BrokerNews, the MFAA's Phil Naylor said this is a "point of difference".
"We think maybe the ASIC recommendations go too far, in that they potentially could be interpreted as requiring more documentation, which would take away the attraction of low-doc products.
"But we accept ASIC's contention that brokers must have a role in reasonably satisfying themselves of the appropriateness of a low-doc product, it's just coming down to how you do that," he said.
The MFAA hopes to come to an agreement with ASIC on a set of guidelines, according to Naylor, so it can then clearly communicate with its membership what ASIC's expectations are.
"I think we can work our way through it - it's not the end of the world," Naylor said. "It's just a question of us working with ASIC on what is reasonable in their expectations."
Naylor said ASIC has always been open to working with the peak mortgage industry body. "All the way through NCCP, we have found ASIC amenable to reasonable arguments," he said.
Ideally, Naylor argues that a statement of income from an accountant should be enough.
"As long as a broker has conducted reasonable due diligence, a statement of income from an accountant should be reasonable," he said.
Naylor added that a broker's responsibility is shared by the lender. "The broker does have responsibility, but the broker is not the person or body that is making the final decision to lend the money; it is a joint responsibility with the lender," he said.
ASIC, MFAA clash over verification