ASIC pulls up brokerage on outsourcing activities

by 06 Dec 2013

ASIC has ordered brokerage Award Mortgage Solutions to engage an independent consultant after an investigation into its credit activities.

The Sydney-based brokerage was deemed to be not fully compliant with its obligations as a credit licensee, including not properly assessing and verify applications and not always supplying disclosure documents to clients.

ASIC was particularly concerned about the brokerages failure to properly appoint, supervise and train its staff and credit representatives, particularly those based in a processing office in China.

ASIC deputy chairman Peter Kell warned brokers to take extra precautions if deciding to outsource any part of their business.

"All licensees must ensure that outsourcing arrangements do not diminish the licensee's ability to fulfil their obligations to customers, or to comply with financial services laws.

"Outsourcing functions to overseas representatives can make it harder for licensees to ensure that these standards are met, and licensees should pay special attention to identifying and managing those risks when considering such a strategy."

The consultant will review Award Mortgage Solution's conduct over the next 18 months to ensure the brokerage complies with its obligations under NCCP, presenting the findings to ASIC.