The Australian Securities and Investment Commission is planning to review mortgage brokers on interest-only lending processes.
After recently reviewing interest-only lending by banks, ASIC’s Michael Saadat said at a Gold Coast conference last week they will now have a look at mortgage brokers.
“Going forward we intend to undertake a further review in the interest-only area moving on from lenders to brokers with a particular focus on brokers’ consideration of consumer requirements and objectives,” he was quoted in Brokernews.com.
“To share some feedback we have gotten from lenders and brokers in this space – and I will try and be completely open with you – ever since publishing our report on interest-only loans and getting the lenders to agree to make the necessary changes, I keep getting asked by lenders what is ASIC doing to make sure brokers will also make changes to their processes.”
“When I have spoken to brokers, I’m asked what is ASIC going to do to hold lenders to the same account as brokers.”
While ASIC will be turning its attention to brokers in a similar way it did to banks, Mr Saadat said the two do have their own unique responsible lending obligations to uphold.
“Lenders seem to be worried that by raising the bar on the information they require brokers to collect from consumers that brokers will shift business to lenders who need less information,” Mr Saadat said.
“Brokers also tells us that the information ASIC says needs to be collected, for example information about a consumer’s requirements and objectives, is information that brokers are already collecting as a part of their normal process with their clients.”
“It is important to remember that both lenders and brokers separately have responsible lending obligations to meet. It is not good enough for a lender to point the finger at brokers and it is not good enough for a broker to point the finger at lenders.”