New laws for mortgage brokers on the way
Wednesday, November 28, 2007/
The tortured process of putting in place a national regulatory regime for the mortgage broking industry took another step forward yesterday with the release of draft laws by the NSW Government.
The proposed laws – which it is hoped will become a template for consistent laws in all states – would introduce a new licensing regime for mortgage brokers, a comprehensive disclosure of costs and fees, compulsory professional indemnity insurance and mandatory professional training for all mortgage brokers.
“A key aspect of the proposed new regulatory scheme is stringent licensing requirements that aim to rid the industry of the bad apples that have given responsible brokers a bad name,” NSW Fair Trading Minister Linda Burney said in releasing the draft.
But Finance Brokers Association of Australia national president Peter White says while laws to clamp down on rogue mortgage brokers are welcome, it would have been better if the states had transferred responsibility to the Federal Government to enable it to introduce a single national set of laws.
“Our members have always supported national legislation, but our concern at the moment is that there will be variations between the state laws that will send compliance costs through the roof,” White says.
The effectiveness of the regime could also be hampered if there are inconsistencies between the laws in different states, White says,
“We all want to stop predatory lending and brokers using products for wrong purposes, but if there is no point bringing something that in that will have inconsistencies – if there are loopholes between states – rogue people will find and exploit them,” White says.
New mortgage broker laws have been discussed for several years, but disagreements between the states and the Federal Government over who should take responsibility for the laws has delayed progress.