An ASIC review has prompted significant changes to credit licensees' practices for ensuring broker compliance with national responsible lending laws.
The upgrades include licensees being required to undertake regular formal reviews of their representatives' compliance, upgrade IT systems to better track credit assistance provided by brokers, ensure they have direct access to their representatives' preliminary assessments of whether a credit contract will be unsuitable for a client - and consider a broader of range of compliance risks when undertaking compliance reviews.
ASIC commissioner, Peter Kell, says Report 330 Review of licensed credit assistance providers’ monitoring and supervision of credit representatives covers 18 licensees who are responsible for over 60% of brokers and specifically looks at their processes for ensuring their representatives' compliance when providing credit assistance for home loans.
“The review was undertaken as part of ASIC's strategic priority to ensure confident and informed financial consumers. Licensees with large numbers of representatives act as gatekeepers as they are responsible for their representatives' compliance with the credit legislation.”
“Given the significant concentration of responsibility for credit representatives among a limited number of licensees,” he says, “these licensees must have robust processes in place to ensure compliance with the national credit legislation and associated protection for consumers.”
Although ASIC found the licensees used various monitoring and supervision processes prior to the review, they also identified a number of compliance risks, including licensees not being able to identify all instances of credit assistance being provided by each of their credit representatives, not having direct access to preliminary assessments, or not having appropriate practices in place to undertake compliance reviews of their credit representatives.