Australian Credit Licence

Hi All

Registration for the Australian Credit Licence will open on 1 April 2010. If you are involved in real estate vendor finance, I suggest you have a thorough read of a couple of ASIC sites. This is because ASIC will soon be taking responsibility for consumer credit nationwide. At that point State based Credit Provider licences will become obsolete and the Australian Credit Licence will come into being, also nationwide. The sites are:

http://www.asic.gov.au/credit

http://www.asic.gov.au/asic/asic.nsf/byheadline/Credit+licensing?openDocument

Cheers, Paul
 
To all the brokers out there, are you planning becoming a licensee in your own right, or a credit representative through your aggregator?
 
I've been with two major Aggregators in the past 12 months. Neither have a clue about Credit Regulation. All Choice was worried about were its obligations as a 'lender'. AFG are not much better, so I will go it alone. My issue is I don't think we should have to be members of the MFAA/FBAA. As far as I am concern once licenced we shouldn't be forced by the Banks to be members of these two money grabbing, lazy thieves.
 
I have considered this and in fact today got a reminder notice asking me make a decision. My concerns are this....... are we then tied to sell Aggregator only products? What about BMM, Mortgage Ezy, AFS etc those that are not part of your aggregator?

And then there is the issue of commissions. If we go down the same path as the Financial Planning industry, they have their own association pushing for no commissions. You could offer your clients a 'commission' free product hopefully at a lower rate than the branch, charge an advice fee etc. Then you don't need an Aggregator, or you'd have to pay them what you charge the client.

Id much rather have a "brokers co-op" similar to what FBAA are setting up and Licence the group that way.
 
Hi Brett

If you have an exclusive agreement with your agg, you cant use outside products anyway.

if you have a non exclusive agreement you dont have a choice to be a representative of the aggregator.

makes sense if you think about it, they cant be responsible for work u do outside of their panel.

ta
rolf
 
Two Years in Gaol for Writing CBA Loan.

Have you considered the implications of the new rules that come into affect 1st July regarding conflict of interest. Simply by registering you are bound by them. The penalties are very severe as I understand it over $1 million for companies and up to 2 years in gaol fro individuals. Now the real worry is what happens when you are falling behind on your CBA volumes and review is approaching. The pressure to recommend CBA increases not just for new business but to maintain existing client relationships and of course your trail. That is a conflict of interest and if it influences your advice - there only one tip I can give you, don't pick up the soap! Meanwhile ASIC appear uninterested in this issue :(
 
No - FINALLY the mfaa have raised this with ASIC and they are reviewing it. At least that maybe one of the holes in the 900 pages of legislation that is being looked at. The fact that there are so many problems with this and yet we have been forced to register I find offensive. As I will say again, where is the professionalism from the brokers point of view? Seems its last !
 
Yes I only just received notification from MFAA "ASIC has indicated interest in the concerns expressed by many MFAA members and now are considering a response to MFAA."

I don't have a lot of confidence as ASIC appear very reluctant to get involved in the internal workings of big business unless they are doing something illegal. In this case CBA aren't doing anything illegal so the question is, will ASIC budge on what is a very fundamental point of the ACL
 
Think it'll boil down to the best possible lender for the client which is available to the broker and ASIC will take a common sense approach.

Otherwise go fee for service.

BTW - Brett - you should check out connective as an aggregator. leaves afg, fast & plan in the dust.
 
If you feel you might be conflicted in recommendng CBA, either:

(a) disclose said conflict to the client
(b) remove said lender from your panel.
 
Disclosing the conflict is only part solution, however what happens to us if/when CBA take their turn at high margin as Westpac at the moment ie: simply uncompetitive. We are faced with selling uncompetitive loans in order to keep the accreditation, that is clearly not in the clients interest (even if disclosed) and as I read the regulations constitutes a breach.
 
Disclosing the conflict is only part solution, however what happens to us if/when CBA take their turn at high margin as Westpac at the moment ie: simply uncompetitive. We are faced with selling uncompetitive loans in order to keep the accreditation, that is clearly not in the clients interest (even if disclosed) and as I read the regulations constitutes a breach.

Best option is avoid the conflict of interest by dumping CBA

Second best option, if the perceived conflict can't be avoided, is full disclosure.

Perhaps try something like this:

"Ms Borrower, I recommend you take the CBA loan. It's not unsuitable to your needs though is more expensive than other options. In the interests of full disclosure, I should also point out that even though this particular lender treats me with wanton disregard and my industry with abject arrogance, I feel my business can't exist without them and offer this loan in the context of a volume hurdle, the failing of which to meet could cost me $500."


FWIW
 
It's straight forward biz.
You wanna have a CBA account, you need to buy XX per mth.
You are not obliged to sell their product, there's a myriad of others.
If you can't find other competitive products in an oversupplied market than maybe "going it alone" ain't for you.

As for membership/rego, the MB industry is in many cases an ignorant swill of clueless wannabees who are in effect sales people on commission dishing out what should be considered financial advice requiring an AFS.
Just like the managed funds where they call themselves "advisors".
They are not brokers, nor advisers but agents and should thus labeled.

Both industries need cleaning up, registration should be much more stringent, and it should be made clear that they are working for the commission payers and not the borrowers/investors.
Unless they are fee based with full disclosure & transparency.

Good luck to yas
 
I wrote a CBA loan in the last fortnight. Given the clients circumstances, it is an appropirate recommendation for them.

Their existing mortgage is with the CBA and it's fixed. They want to release equity to invest.

Refinancing to another lender (regarless or the compeditors rate) would be totally inapporprate as they'd have to break their existing fixed rate at considerable cost. I simply set up a second loan beside the fixed to access the equity.

Another recent client is self employed. It's a bit touch and go to prove their full income but they have an existing relationship with the CBA. The odds of a successful application are substantially better with the CBA than another lender. The loans approved and they're happy even though I fully disclosed that there are 'cheaper' lenders out there.

The CBA is the biggest lender in the country and they have a lot of customers. It's hard to beleive that a successful broker writing any reasonable volume of business can't find 3-4 customers per 6 months who's circumstances make the CBA a good match due to an existing relationship. In my opinion many brokers are doing the wrong thing by recommending to every client they meet to refinance their eixisting loans, usually because the broker then gets paid more.

I hate the CBAs arrogance as much as the next broker, but seriously it's not a hard quota to meet ethically, and it just pushes brokers to go elsewhere whenever they can.

For the record, I'll be getting my own ACL. I have no intention of giving an aggregator (or anyone else) control over my business.
 
The CBA is the biggest lender in the country and they have a lot of customers. It's hard to beleive that a successful broker writing any reasonable volume of business can't find 3-4 customers per 6 months who's circumstances make the CBA a good match due to an existing relationship. In my opinion many brokers are doing the wrong thing by recommending to every client they meet to refinance their eixisting loans, usually because the broker then gets paid more.

I hate the CBAs arrogance as much as the next broker, but seriously it's not a hard quota to meet ethically, and it just pushes brokers to go elsewhere whenever they can.

For the record, I'll be getting my own ACL. I have no intention of giving an aggregator (or anyone else) control over my business.

Agree with all of that Peter, especially the part about getting our own ACL, I am astounded at brokers I know leaving it to the aggregator, just because they can't be a$$ed doing their own compliance...
 
PT - I agree with what you say in regards maintaining CBA clients at the moment, but things can change CBA will eventually take it's turn at margin growth just as Westpac are doing now - we only have a small team of loan writers and in my experience over last 6 months very few Westpac customers want to stay with them and as a result we have written very few Westpac deals - if CBA were as uncompetitive as Westpac and we still had to write 6 loans p.a. I would struggle to maintain my writers accreditations.

There are any number of possibilities that could make CBA less attractive at some stage in the future but the volumes will still apply.

I do agree about the licence - I really wouldn't trust my aggregator with that much control, would be even worse if it was owned by a bank .
 
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