ACCC allows Aussie and Mortgage Choice to require MFAA membership
Tuesday, May 15, 2012/
Mortgage Choice and Aussie Home Loans will be able to continue to require that their mortgage brokers be members of the Mortgage and Finance Association of Australia (MFAA) without the threat of legal action, following a ruling by the Australian Competition and Consumer Commission (ACCC).
Aussie and Mortgage Choice along with Virgin Money and ING Bank lodged applications in 2007 and 2008 known as “third line forcing notifications” seeking protection from legal action for its exclusive arrangement with the MFAA.
The requirement restricted brokers’ choice of industry body membership and did not recognise membership of rival industry body the Finance Brokers Association of Australia (FBAA).
The notifications protected the four organisations until such time as the ACCC made its ruling.
During the course of the review, ING Bank withdrew its notification and Virgin Money advised that it did not engage in the conduct.
Exclusive dealing arrangements such as third line forcing are prohibited under Australian competition rules, but organisations can apply to the ACCC for protection from legal action for these arrangements to continue.
The applications proved highly controversial within the mortgage broking industry.
In making its ruling, ACCC chairman Rod Sims said the consumer watchdog believed the arrangements “continue to deliver a benefit to the public, notwithstanding the commencement of a national regulatory regime for the credit industry in 2010”.
“The MFAA’s membership requirements impose higher educational and certain other professional standards on its members than the regulatory regime,” said the ACCC in its ruling.
“The ACCC considers requiring MFAA membership is likely to assist those lending businesses to ensure that their brokers are of a consistent high standard and to meet their compliance obligations under the National Consumer Credit Protection Act.
“The ACCC acknowledges requiring MFAA membership restricts choice of professional association for these brokers, thereby limiting competition from other similar professional associations. However, given the small number of mortgage brokers currently affected by the notified conduct compared to the overall size of the industry, the ACCC considers that any public detriment is likely to be minimal.
“Further, the MFAA membership requirement is only imposed by two industry participants. There are a large number of other businesses that individual brokers can work for if they disagree with the MFAA membership requirement.”
This article first appeared on Property Observer.
Feel the churn: How to bounce back after losing staff and clients Sue Parker DARE Group founder
Own it: The 10 things you need to do to manage your personal brand Lisa Stephenson Who Am I Projects founder
How to call your team into action with a winning presentation Emma Bannister Presentation Studio founder
The link between diet and mental health — and how to eat your way to wellbeing Kate Save Be Fit Food co-founder
From interactive videos to AI: The five marketing trends that will dominate 2019 Warwick Boulter Collaboro co-founder
Australia is leading the legaltech revolution, but what does this mean for lawyers, firms and clients? Jodie Baker Xakia founder
Why a video news release needs to be part of your PR strategy Leisa Goddard Adoni Media managing director
Want to catch more customers? Here's how to create a super sales funnel Jovana Vujnic Bumper Leads founder