Just as New Zealand mortgage brokers are fretting that the regulatory regime the government’s Task Force on Regulation of Financial Intermediaries might come up could resemble the current Australian system, Australia is working on producing a new nation-wide regulatory regime.
Under the Australian proposals, mortgage brokers would need to obtain a licence, detail reasons for their recommendations to consumers and disclose all commissions.
They will also face stringent entry requirements and mandatory education.
They will also be required to belong to a dispute resolution scheme and have mandatory professional indemnity insurance.
Currently mortgage brokers in Western Australia and New South Wales are regulated by state-based legislation but they are largely unregulated in other states.
In releasing the proposed new rules, NSW minister for fair trading Reba Meagher said that her office had received more than 320- complaints relating to finance broking in the past year. Mortgage brokers in Australia are estimated to account for a third of all home loans or about $A200 billion worth of loans in 2003/04.
The Mortgage Industry Association of Australia welcomed the proposed new rules, saying they are consistent with its existing requirements of its members.
MIAA chief executive Phil Naylor says some issues will need clarification including a clear description of the types of mortgage businesses which will be covered and ensuring that licencing fees aren’t an unreasonable burden on small businesses within the industry.
The MIAA has been lobbying both state and federal governments in Australia for the past two years for a nationally consistent regulatory regime, Naylor says.
"The regulatory framework embodies the standards that the MIAA demands of its members and we will be pleased to see these standards imposed across the entire industry," he says.
