MFAA tackles NCCP broker 'no-man's land'

by Mackenzie McCarty16 Apr 2013

The MFAA has made a submission to the federal government’s Department of Treasury seeking a resolution of the potential breach by brokers of NCCP because of the way some lenders treat loan variations.

The submission points out that, while some lenders treat loan variations as just that, others require a new loan contract.

MFAA CEO, Phil Naylor, says the problem that this creates for brokers is that, if a broker initiates a variation to the loan contract on behalf of a client, where the lender treats this as a new contract, NCCP requires the broker to go through the whole responsible lending obligations under the NCCP as if the variation was a new loan.

“This places the broker in no-man’s land, because at the time he or she commenced the variation process, the ultimate treatment by the lender is likely to be unknown. It is not appropriate for these functionally identical outcomes to trigger different responsible lending requirements,” says Naylor.

“Our solution in the submission is simply that the regulations should make it clear that if a variation , which does not involve an increase in the amount of the credit, should be regarded under NCCP as a variation irrespective of the lender’s treatment of the transaction. In this way the whole responsible lending obligations process will not be triggered.”


  • by Country Broker 16/04/2013 10:48:54 AM

    Good work by the MFAA , we need a uniform approach to this by ASIC .

  • by Scott Beattie 16/04/2013 11:25:59 AM

    I have a client with a RHG low doc loan, was originally written under the 85% low doc product.
    Client can now refinance to an 80% low doc due to property increase, but can't prove income - they don't want any money, just a better rate - seems strange that they would stop paying their loan just because they got a lower rate??

    For my own loan, I went to merge 2 loan splits into 1 and was told that I didn't earn enough - I wasn't going to owe any more money, just merging Loan A & B all into Loan A.

    I applied for a separate $1k credit card, again was told I didn't earn enough (different lender), even if I reduced my $20k card (which owes nothing) down to $5k - the same lender then offered me an increase of the $20k card to $25k due to my excellent repayment history??

    Yes, legislation is deigned to protect, but some common sense needs to prevail.

  • by Papery 16/04/2013 4:33:48 PM

    Most variations are on the face of it pretty straightforward processes....and besides having to keep detailed notes & updating a Fact Find, my Aggregator also insists I go through the process of a Credit Guides & Credit Quotes & Prelim Assessment docs...none of which changes the outcome for the client, but give me a pile more paperwork....and all most of the Lender forms call for is a simple, breif one sentence checkbox.....