Focus on brokers’ Act

INCREASED vigilance by the Finance Brokers Supervisory Board has forced one mortgage originator to stop trading in WA and could prevent another from even starting.

Now Mortgages was told it was operating illegally in WA because it was not licensed.

To become licensed, the company has to lodge a $50,000 bond with the WA Government and one of its members needs to undertake a two-year course.

Now Mortgages franchise development manager Michael Schulze said his company had taken legal advice and decided to cease operating in WA.

Mr Schulze said he was not prepared to pay the $50,000 bond because he could see no value in it.

The licence requirements also could pose a problem for another mortgage originator, Wizard Financial Services, which is looking to set up operations in WA.

Its WA operatives have met with the licensing authorities but feel, because they sell their own loan products, the law will not affect them.

The licence and bond requirements are part of the Finance Brokers Control Act of 1975. Many in the finance brokers’ industry believe the Act is antiquated and cannot cope with the new phenomenon of mortgage origination.

Mortgage Industry Association of Australia WA president Barry Barr said in 1975 there was no such thing as brokers dealing with institutions for residential purposes.

“I happen to think the Act was designed for people acting for private mortgage funds,” Mr Barr said.

“Those seeking institutional funds have been pretty much excluded unless they are members of the Mortgage Industry Association of Australia.

“It appears the Finance Brokers Supervisory Board interprets it differently, but it has never tested its interpretation.”

Investment activist Denise Brailey believes the Finance Brokers Super-visory Board is “chest thumping” because it could soon be closed down.

The new WA Government favours shutting down the Land Valuers Board and the Finance Brokers, Settlement Agents and Real Estate and Business Agents supervisory boards and replacing them with a single tribunal that is overseen by judges.

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