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

NCCP for small business divides pundits

Notify me of new replies via email
Australian Broker | 01 Nov 2012, 06:00 AM Agree 0
The mortgage broking community is divided over calls for the expansion of the National Credit Code to protect vulnerable small businesses
  • David | 01 Nov 2012, 10:31 AM Agree 0
    When will NCCP provisions, including Responsible Lending and full disclosure be applied to equipment finance which for far too long been on easy street with little or no compliance and the opportunity to charge whatever fees they desire without the client having any knowledge. Why is it that these financiers may levy 4s or 5s when a mortgage broker must struggle for 0.5% less aand be accountable for the next thirty years when these brokers can walk away and simply move onto the next fruitful transaction?
  • ozboy | 01 Nov 2012, 10:31 AM Agree 0
    So Mr Sayer's whole argument is based on one thing, re-evaluations and for that he wants this cumbersome legislation to be enacted. Who said we are becoming a nanny state?
  • Aaron Greffenius | 01 Nov 2012, 10:39 AM Agree 0
    Brokers can put clients with commercial lenders who don't annually review, specifically to avoid this. Everyone hates the idea that banks can foreclose on debt taht has been conducted perfectly. We all hate this. What I would hate more is more regulations out there making this impossible.
    Why shouldn't customers be able to choose a loan even if there are annual reviews attached to it? These calls for new regulations only close down options for clients. A whole stack of new ones don't spring up as a result. Just the old options dissappear.
    Regulations always are well meaning and almost always are disasterous. Take the recent new paperwork needed. What is the point of duplicating all the information that is in an application. Are the clients somehow more aware if they see it twice? that is all the NCCP ever did. new paperwork that says exactly what the old paperwork said. Oh yeah, it also made lots of flexible options illegal, so now self employed small businesses have far less choice. do we really want to compound that now?
  • May | 01 Nov 2012, 10:57 AM Agree 0
    I have checked Ken Sayer's Mortgage House website. He only deals in home loans. There is no mention of business or commercial finance on his site. If that is not his field of expertise, he should not be making proposals to any NCCP changes that will further hamper business finance.
    As a commercial broker, I had a recent application which was caught in this poorly thought out legislation.
    My client had unencumbered commercial property which he wanted to gear against to acquire residential investment property. Despite his clear capacity to understand the risks as a sophisticated investor with a portfolio of mixed properties worth $3.5M, under this legislation, it is deemed a regulated transaction.
    This investor is now forced by the legislation to only invest in commercial property if he wants to gear against this property. He is not happy. Where is the choice and freedom to make your own investment decisions?
    So Ken, your argument of re-valuation and the banks then calling in the loan is moot as the maximum LVR for business transactions gearing against residential property is usually 80% which has lower risk of re-valuation than the residential lending space of 95% with some product suites that effectively lend 100%.
    Small business owners will NOT Thank You for your call to widen the NCCP net. They already struggle to get funding under the NCCP as it stands and the impact on Low Doc Products.
    The Small Business Minister should instead counter this NCCP impact by setting up small business finance guarantees as the legislation has effectively removed the choice to use one's home for business ventures.
  • Steve McClure | 01 Nov 2012, 11:00 AM Agree 0
    David, regarding to your comment today, yes the commissions are usually a higher percentage of the deal size. However, deal sizes are usually much smaller and there are no trailing commissions. The skillset required is much different and without a specialised structure in place, many mortgage brokers would struggle to deliver a quaility equipment finance service. The NCCP can still apply to equipment finance, so there's no magic exclusions. The point of contention is that there is a scope for a high level of non-compliance because those operators are not as well versed in legislation as brokers are.

    But, if you'd like to explore equipment finance as a viable add on to your professional product range, look me up and we'll have a chat.
  • Edgar | 01 Nov 2012, 11:14 AM Agree 0
    I think that Ranjit is being very naive, or else he's got his blinkers on, if he thinks that small businesses are "more sophisticated".
    The majority of of small businesses are indeed "Mum and Dad" operations who are often very naive about borrowing and probably wouldn't realize the risks of property being revalued downwards.
    Yes Aaron brokers could put clients with lenders who don't review annually, but what if they don't? NCCP is about doing the right thing by your client why shouldn't that extend to small businesses.
Post a reply