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MFAA Prosper : Mortgage and Finance Brief 05
3;8 & E;<@:D #!" @887 9AC -C87<E /<68@D<@: -A?B><4@68 1>4@ 4@7 1CA687FC8D 9AC ?4@4:<@: JAFC 0--1 A5><:4E<A@D )A>7 084>KE 'A?B><4@68 -4@4:8?8@F 0JEF8? 6AH8DE 4>> F;8 .''/ D8CG<D8?8@FE 4@7 ?G6; ?G6; ?AD8! *F <E 4668BF45>8 FA &0*' 4@7 <E EGBBADF87 5J F;8 9AD GE8 5J <FE ?8?58DE$ +BB>J 9AC JAFC /<68@68 2E8 AGD (A#*F#3AGDE8>9 'D87<F ,<68@E<@: +<F AD >8F GE 7A F;8 IAD= 9AD JAG F;DAG:; AGD /D8?<G? ,<68@E<@: 08DH<68$ 34B <@EA AFC =@AH>87:8 4@7 8IB8CE<D8 :4<@87 9CA? 784><@: H<E; +2.- 9AC AG8C * J84CD# -C87<E /<68@D<@: 4@7 -A?B><4@68 .@"4",AI $& *'(' ))$$ AD H<E<F% HHH#:A>7D84>#6A?#4F 1A =<6= EF4DF JAGD ><68@E<@:" 64>>% 24G8 ?A@8J! D4G8 E<?8! D4G8 ;4DD>8 % & refer rals to you. It won't do you much good to blame the referrer if a consu mer complains about the debt they are in, the Australian Securities and Investments Commission (ASIC) investigates and discovers you knew the refer rer wasn't following the rules. You must also keep a register of referrers. When you receive a referral, you must: • contact the consumer within 10businessdays • infor m the consumer that you have obtained their contact details from the referrer • explain the financial benefits, if any, the referrer may receive for the refer ral and • specifically ask the consumer if they are happy to continue the conversation. When do the new laws apply? The new laws are already in force, so make su re you put your refer ral agreements in place immediately. Is it true that referrers need to be licensed? There has been some confusion about whether refer rers need their ow n licence or need to become a credit representative. Generally, for referrers such as real estate agents and conveyancers, so long as they have agreed to the ter ms of the referrer agreement with you, they are exempt from needing a licence or being a credit rep. However, if the refer rer provides more than just a brief summary of the potential borrower 's situation, for example by asking detailed questions about their credit history and debt position, ASIC may no longer deem the refer rer eligible for the licensing exemption. This could apply to some accountants who provide lengthy referrals. If this is the case, you may need to consider appointing the refer rer as a credit representative. If you are unsu re, seek legal advice or call MFAA on (02)8905 1300 and speak to Calvert Duffy or Peter Kennedy in the compliance team. What about referrer groups? Referrals provided by groups (such as call centres) that have a full-time role in providing refer rals are not exempt from the licensing requirements, and will therefore need to obtain their ow n licence. MFAA helps brokers If not for the hard work of MFAA behind the scenes in discussions with ASIC and politicians, the laws on referrers would have been much tougher. The referrer section of the consumer credit legislation was based on the laws imposed on financial planners, which are more strict. For financial planners, a referrer is limited to telling a consumer: "Go and see Joe Bloggs Financial Planning, they're really good." The referrer is unable to pass on any details to the financial planner -- not even the consumer 's name -- unless the referrer is licensed or an authorised representative of the financial planner 's licence. Through MFAA's lobbying efforts, referrers to mortgage brokers can pass on a consumer 's name and contact information and still be covered by a licensing exemption. “The new laws are already in force, so make sure you put your referral agreements in place immediately.” News
Mortgage and Finance Brief 06