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Mortgage originators in limbo as deadline nears

A KEY sector of the financial services industry is still waiting to be told whether or not it will be included in the Financial Services Reform Bill, on track to become law by the end of the year.

Mortgage originators remain confused as to whether their activities will be classed as “giv-ing financial advice”, and there-fore be included in the Bill.

Under a section of the Bill, titled CLERP 6, the Insurance Act and parts of Corporations Law, which regulate insurance brokers and financial advisers respect-ively, will be replaced with a single scheme to regulate activities classed as “giving financial advice”.

If mortgage originators are included in the new regulations they will have to obtain an Australian Financial Services Licence.

And rather than have their licences automatically renewed, originators and their staff would be required to participate in ongoing education and training from an authorised professional body.

The Loans Café director, and mortgage originator, Anne-Marie Syme said while the confusion was creating headaches, the industry would be better off in the long run if it was included in the Federal Bill.

“I think it would make the mortgage origination industry more professional than it is today,” Mrs Syme said.

“The requirement of ongoing education would ensure that members kept up to date, which in turn would benefit not only the industry, but also the consumers.”

Being included in the regulations also would head off difficult situations where mort-gage originators may need to be licensed to answer some quest-ions and not others, according to Gadens Lawyers Sydney manag-ing partner Jon Denovan.

Mr Denovan said this could mean mortgage originators may not need a licence to perform their basic role, which was to find the best home loans for clients, but might need a licence to answer any questions on interest rates, negative gearing and home equity loans.

“Up to 50 per cent of loans are now sold through mortgage brokers and most people, when they are after a home loan, will ask about fixed rates or varies rates … naturally they want to talk about these things, they are buying a home,” he said.

However, if mortgage origina-tors were included and required to comply with the new licensing arrangements by the end of the year, “sheer panic” would ensue, according to Mr Denovan.

“How will they be ready for it in a few months when they still don’t know whether or not they are included in it,” he said.

Mrs Syme said originators would not like to be included straight away, and would prefer a few months to obtain their licences and comply with the regulations.

But, if eventually included, originators in WA wouldn’t find the process as much of a trial as their eastern states colleagues, as those in this State have been licensed under the Finance Brokers Supervisory Board since 1975.

“WA mortgage originators are not phased because we have had to be licensed for years and the process involves the board looking at references, the fields you have worked in, your standing in the community,” Mrs Syme said.

“The licences are not just handed out.”

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