Bill toughens scrutiny of brokers

THE State Government hopes proposed new legislation to regulate finance brokers will provide a blueprint for reform in other States.

The legislation follows the Temby Royal Commission into WA’s finance broking industry, which investigated multi-million dollar losses by investors.

Consumer and Employment Protection Minister John Kobelke said State governments had tried without success to get the Commonwealth to act.

“Clearly, the most effective system would be to have national regulation administered by the Commonwealth rather than on a State-by-State basis,” he said. 

“Regrettably the Commonwealth has taken the view that, with the exception of brokers arranging or negotiating pooled mortgages, responsibility for the regulation of finance brokers should remain the responsibility of State and Territory governments.” 

Consequently the State was unable to repeal the Finance Brokers Control Act, as recommended by the Temby Royal Commission, because this would have resulted in most finance brokers being unregulated.

The bill abolishes the Finance Brokers Supervisory Board and makes the Commissioner for Fair Trading responsible for licensing, investigating and launching disciplinary action against finance brokers.

WA president of the Mortgage Industry Association Murray Sebbes, who represents about 700 loan writers, was generally supportive of the amendments.

He praised the greater investigative powers conferred on the commissioner and the increased penalties.

For instance, the commissioner will have the power to suspend a broker’s licence for up to 60 days, pending disciplinary action, and to publish statements warning the public about brokers who are carrying on business in an unsatisfactory or unfair manner.

The maximum penalty for continuing business as a finance broker is to be increased from $500 to $50,000. 

The bill also gives extra powers to investigators, who will be able to enter the business premises of a finance broker without a warrant.

Mr Sebbes said moves to boost consumer protection “sit well with the MIAA’s own initiatives in raising the bar for accreditation and our own regulatory and investigative schemes, including the Mortgage Industry Ombudsman Scheme”.