A code of conduct for Finance Brokers in Western Australia, implemented by Consumer Protection Minister Sheila McHale on Tuesday, has been labelled "irresponsible" by the Finance Brokers Association of Australia.
A code of conduct for Finance Brokers in Western Australia, implemented by Consumer Protection Minister Sheila McHale on Tuesday, has been labelled "irresponsible" by the Finance Brokers Association of Australia.
The Minister said the code, which is due to come into effect on June 29, was designed to strengthen existing licensing arrangement for finance brokers.
The new code would force brokers to
- Disclose much more information to borrowers before negotiating or arranging any loan, including the range of lenders the broker used and details of any fees or commissions received;
- Make reasonable inquiries about the needs and financial circumstances of borrowers;
- Genuinely believe any loan they arrange was appropriate for the borrower;
- Disclose any conflict of interest; and
- Not refinance loans solely for the purpose of earning fees or commissions.
Brokers who flouted the new code faced a fine of up to $10,000 and cancellation or suspension of their brokers licences.
But FBAA general manager Maurie Unwin said the conditions did not go far enough, failing to regulate direct-to-consumer financing operators.
"When you have brokers offering point-of-purchase financing at and charging exorbitant rates found only in the fine print you have to consider action to protect those consumers without legal acumen," he said.
"Every broker should follow the same rulebook otherwise you are giving rogue operators free reign."
The full text of an announcement from the FBAA is pasted below
The Finance Brokers Association of Australia is strongly opposed to the revised Finance Brokers Code of Conduct that is anticipated to commence on 29 June 2007 in Western Australia.
The FBAA see the revised code as irresponsible and calls on the government and the Department of Consumer and Employee Protection to consider immediate changes.
The FBAA feel that the Government has made positive progress in attempting to bolster consumer protection, however, are concerned that the act does not regulate all persons in the wider broking community, namely those operators providing direct-to-consumer financing. The FBAA have submitted their concerns to the WA government to no tangible avail.
The FBAA see the introduction of the revised code as a precursor to the drafting of a national regulatory model and feel that the WA government are attempting to gain political mileage while ignoring the code's glaring inadequacies. The government has expressed their intentions to address these issues after commencement of the code, but the FBAA feel that this will lead to a drawn out legislative process leaving consumers vulnerable in the interim.
FBAA General Manager, Maurie Unwin, said that the FBAA have expressed their concerns and offered their resources to the WA government in an attempt to address the shortcomings in the revised code and provide a more comprehensive legislative framework that will regulate all brokers.
"We feel that the WA government wants to rush an unfinished piece of legislation through to the public to get a political 'gold star' rather than work in the best interest of the consumer. The WA revised code could provide the framework for the introduction of federal legislation and it would be best to get it right now rather than wade through the seas of red tape to amend it later, it is political procrastination and irresponsible governance."
"When you have brokers offering point-of-purchase financing at and charging exorbitant rates found only in the fine print you have to consider action to protect those consumers without legal acumen. Every broker should follow the same rulebook otherwise you are giving rogue operators free reign," Mr. Unwin said.
"The FBAA recognizes that the $30 million compensation packages offered to those affected by the finance broking scandals have put the political wheels in motion and therefore the government must act quickly to reinstate consumer confidence, however, we also feel that these issues are outdated and no longer relate to today's broker. The current legislation will suffice while the government works to create an effective model."
"The FBAA calls on the government to be measured in its approach to this issue and put consumer interest before political expediency."
