Making news this week, the two broker associations slammed the “grossly unfair” new funding model for ASIC, ASIC flexed its regulatory muscles and brokers grabbed more of the mortgage market pie.
both challenged a proposal recommended by the Financial System Inquiry (FSI) that ASIC should adopt an industry funding model, claiming it will be detrimental to brokers operating small businesses.
The new model will be financed directly by those industries that create the need for regulation, rather than the taxpayer, through a combination of annual supervisory levies and fees-for-service for specific services required as needed.
Under the new fees-for-service model, credit intermediaries will be charged a fixed fee of $5,700 to apply for an Australian credit license. According to the MFAA
, this could a broker’s application fees rise by more than 1,000%.
“A fixed flat fee approach for the application of a credit licence is not only grossly unfair to smaller participants, it does not reflect the complexity of applications. In essence it is a lazy approach to adopt such a calculation with the largest relative burden then being artificially placed on smaller participants,” the MFAA
stated in a submission to the government.
According to White, the expensive fixed fee could place a significant barrier to entry on new brokers.
“On the old scale $5,500 topped it out, but this is $5,700 from beginning to end. That doesn’t make sense. What we don’t want to see is barriers placed on new-to-industry people coming into the market. To me that sort of thing becomes a barrier to entry,” White told Australian Broker
ASIC was also in the news this week for flexing its regulatory muscles. This week the regulator revealed the outcome of two industry investigations.
One investigation led to ASIC disqualifying a Sydney property adviser and director of an authorised mortgage broking
firm from engaging in credit activities for four years. Craig Eric Lynch was the director of Paramount Financial Services (PFS) and Paramount Finance & Investment Services (PFIS), which were authorised to act as mortgage brokers.
An ASIC investigation alleges that Lynch had breached his duties as a director of PFS and PFIS. ASIC banned him engaging in credit activities and also banned him from managing corporations for four years.
ASIC also banned mortgage broker Angie Skouras
for four years and has had the Australian credit licence of his company, Global Edge Finance Group, cancelled.
As the sole director, responsible manager and key person on the licence of Global Edge, ASIC found that Skouras failed to ensure that Global Edge complied with its obligations under the credit legislation.
Finally, Commonwealth Bank of Australia’s (CBA
) half year results show brokers are grabbing significant market share from the proprietary channel
Brokers accounted for 45% of the $44 billion in new home loans settled by the major bank over the second half of 2015, growing their market share over the six month period by 4%. Meanwhile, CBA
’s proprietary channel’s market share dropped 4% to 55%.