ASIC Commissioner Peter Kell talks exclusively to Australian Broker TV journalist Donna Sawyer about the regulator's plans to take a hard-line approach to non-compliance and its key enforcement priorities over the coming months.
Video transcript below:
Interviewer: ASIC Commissioner, Peter Kell, thanks for joining me. Are brokers and aggregators so far meeting their requirements under NCCP legislation?
Peter Kell, ASIC
Peter Kell: ASIC conducted a study at the end of 2011 actually on how brokers were travelling in terms of complying with the new legislation and we found that generally they was a pretty good understanding of the new legislation, but there were some areas where we thought there needed to be improvement. For example, brokers need to understand that they have responsibilities when it comes to establishing the customer’s ability to repay or deal with the credit that’s being offered. They can’t just rely on for example the lenders, the information provided by the lender. So while we are seeing generally good compliance, it’s very important for brokers to understand that their responsibilities in this area are also quite important to get across. They can’t sort of if you like outsource those to others.
Interviewer: What are the key areas that ASIC plans to focus on for the mortgage broking industry going forward?
Peter Kell: I’d like to mention three areas where we will have a focus for our enforcement in the mortgage broking space. The first relates to fraudulent material provided on loan applications. That’s obviously an area for concern. We’ve have already banned 6 advisors since the new credit legislation came in relating to this sort of activity and we’ve also obtained criminal outcomes against a broker again for this sort of fraud. It’s clearly unacceptable, we will crack down on it where we see it.
The second area I’d like to mention is advertising. ASIC has signalled a tougher approach to advertising or generally across financial services and that certainly includes credit. We released a regulatory guide in November 2012, that outlines how we are going to approach the regulation of advertising in the credit space so I would encourage anyone who wants to know more about that to go our website, have a look at that guide. And to give you a sense of what we are doing here, we have had more than 40 ads in the credit area alone changed in 2012, upto November, 2012 either withdrawn or modified and that’s sending a signal to the market that we don’t want consumers confronted by misleading ads.
The third area is disclosure. We want to make sure that disclosure statements, especially around fees and commissions are accurate and that includes when commissions are paid not only by the lender, but by other third parties, for example, real estate agents. It’s very important that consumers get the full picture when it comes to that sort of disclosure and we will be taking a harder line going forward in that area.
Interviewer: Is ASIC’s approach to the industry likely to be less light touch going forward?
Peter Kell: Look I wouldn’t characterise ASIC’s approach as light touch. Since the new credit regime was introduced, we have cancelled 14 licenses, we have banned 12 people from the industry for a range of problematic misconduct, we have also had successful criminal charges laid against a broker and we are continuing with quite a wide range of investigations into different parts of the credit sector. So we are sending a message that compliance with the new regime is something that people do have to take seriously and where we see misconduct we will be cracking down on it. Having said that, we also want to help the industry where possible through the issue of regulatory guidance, for example the guidance around advertising that I have mentioned so that reputable players, honest players can understand their obligations more easily and avoid slipping over into the wrong side of the line.
Interviewer: ASIC Commissioner, Peter Kell, thanks for joining me.