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Govt to move on brokers' Act

THE WA Government is moving to make changes to its controversial Finance Brokers Control Act of 1975, which has stalled the entry of two mortgage products providers into the WA market.

Mortgage Industry Association of Australia WA president Barry Barr said he met with Finance Brokers Supervisory Board staff on Tuesday to discuss who should be registered under the Act.

Under the Act, mortgage product suppliers have to lodge a $50,000 bond with the WA Government and meet a compulsory training require-ment. However, it is understood the bond for mortgage originators has been dropped to $5,000.

Wizard Financial Services has had its expansion into the WA market stalled by the Act and has been forced to operate through a broker.

Wizard normally shuns brokers, pref-erring to operate through a branch network.

However, to meet the requirements of the Act it has to lodge a $50,000 bond with the WA Government and its staff has to undertake a training course.

In May Business News reported on Now Mortgages being forced to leave the WA market because it fell foul of the Act.

Now Mortgages franchise development manager Michael Schulze baulked at paying the $50,000 bond because he could see no value in it.

Wizard executive chairman Mark Bouris said his company planned to establish up to eight branches in Perth because it was an attractive place to lend money.

Mr Bouris said Perth had been left as the last part of Wizard’s national expansion plan because of the highly competitive broker industry operating here.

“We would like to have an office operating in Perth in the next two months. We’ve had people over here for some time now and they’ve been enrolled in a course over here to gain accreditation,” he said.

The company has been forced to use Loan Corp’s licence to trade in WA, but Mr Bouris stressed that was only a short-term solution.

Mr Bouris branded WA’s criminal confiscation laws “terrifying”.

The law gives the Director of Public Prosecutions the power to vest property to the State free of encumbrances such as a mortgage under a number of circumstances. It is aimed at curtailing the activities of drug dealers.

Mr Bouris said lenders would need to undertake criminal record checks to minimise that sort of risk.

“You can’t do that for privacy reason. You can only do credit checks. This sort of law is a risk of doing business,” he said.

p Also see page 25

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