Australian Broker forum is the place for positive industry interaction and welcomes your professional and informed opinion.

ASIC tight-lipped on clawbacks

Notify me of new replies via email
Australian Broker | 26 Mar 2014, 08:01 AM Agree 0
Corporate watchdog ASIC is keeping quiet on the clawback debate, ACCC sets out some vague guidelines
  • Patrick McMenamin | 26 Mar 2014, 10:33 AM Agree 0
    Has anyone actually read Regulation 79A. Neither "credit fee" nor "charge" are defined in the Regulations, so these terms take their ordinary meaning and are therefore would be interpreted with a broad meaning by the Courts. It appears that nothing in the Regulations suggests that such fees or charges are restricted only to fees or charges levied against or payable by the consumer. Note the generality of 79A(1)(b) "it is [a credit fee or charge] to be paid on or in relation to the termination of the credit contract". I suggest that clawback of commission resulting from early termination of a relevant credit contract is captured by the prohibition. Again it is appropriate to ask: "Why has there been no effort on the part of MFAA/FBAA and/or aggregators to explore and confirm the meaning of Reg 79A and if it is general, as I suspect, to take action to have the regulation enforced against lenders in breach?" As the payment of commission, as required, is disclosed in the credit contract, the existence of such commission payment and therefore any clawback is integral and related to the credit contract.
  • Jenine | 26 Mar 2014, 10:42 AM Agree 0
    Which aggregator does not support clawbacks?
  • Country Broker | 26 Mar 2014, 11:01 AM Agree 0
    I am a broker and I am amazed that ASIC as the regulator have been asked to comment on "clawbacks" , They regulate credit and credit advice . Clawbacks are part of a commercial contract our aggregators have entered into with a lender. Nothing to do with a "fee" charged to the consumers. As it is the ACCC are more likely to become involved not ASIC . If the industry can prove that the behaviour of the lenders who are charging claw backs is predatory behaviour, Unconscionable conduct , or anti competitive ( which is most likely the case) especially if a lender charges a claw back on a loan they have rewritten ( think ANZ and CBA policy) , then the lender would need to the investigated by the ACCCC not ASIC. Clawbacks to me are just plainly wrong , predatory and anti competitive.
    The only way they will stop is for the MFAA and FBAA to bring pressure to bear on the lenders, and for Brokers to say to the aggregators who are owned by the banks , your parent needs to stop this behaviour or I ma going elsewhere. It is a brokers decision as to who thye aggregate with and to who they place deals with as far as lenders go.
    It will only take a couple of lenders to stop this behaviour and the rest will follow.
  • JA | 26 Mar 2014, 11:09 AM Agree 0
    When a clawback is enforced and automatically deducted from our commissions without notice should we the broker then be automatically reimbursed the commission the aggregator has deducted from our original payment. Of course not, we just cop this in the chin. I cannot recall seeing anything in our original agreement with our aggregator that protects them from paying us back when a clawback is enforced upon us. Maybe if our aggregators were made accountable from their hip pocket they may actually make a stand for us brokers who are the sole purpose of their existance.
  • Keith of the West | 26 Mar 2014, 12:31 PM Agree 0
    Gee I would love to see the Federal Govt clawback some of the ASIC salaries see how they feel
  • Troy | 26 Mar 2014, 01:49 PM Agree 0
    There was a way the borrower covered the clawback, it was called a deferred establishment fee, most could not or would not sell it. There is no way lenders should be paying for business that leaves within 18 months, either broker or client pays. The other option, a trail only product.
  • Susan | 26 Mar 2014, 03:09 PM Agree 0
    @Troy. The lenders pay for business that leaves within 18 months through the branch network - why then should the broker introduced business be treated any different. If the banks can't afford it (CBA profit for 1st half of 2014 was $4.2BILLION)...then how can the broker afford it???? I know I didn't make anywhere near $4.2Billion in 6 months last year! If I was making that sort of money, I don't think I would be bothered about the odd clawback - but sadly I'm not a bank. Once upon a time CBA never clawed back if you could provide evidence of a sale...however the poor dears must be feeling the pinch because they now claw back on sales as well.
  • scratch | 26 Mar 2014, 05:34 PM Agree 0
    i have a mate who works for asic enforcement of brokers.
    Hes said that as long as our agreement states it and the consumer signs it, as long as we are compliant then there wont be a problem.
    Where brokers will have a problem is if they get a CB and then seek to recover it from clients and its not in the documentation.

Post a reply