CONSUMER GROUPS, banks and professional associations have all argued against the Federal Government’s proposal to only shift mortgage regulation and margin lending to its control.
Many also recommend compulsory membership of ASIC-approved alternative dispute resolution schemes, which at present only covers Australian Financial Services licence holders or members of the Mortgage and Finance Association of Australia.
The Green Paper on Financial Services and Credit Reform consults on a range of regulatory change, including mortgages and mortgage broking advice, margin lending, trustee corporations, debentures and property investment advice, as well as other credit products, such as credit cards, personal loans and micro-lending.
In one option the government envisages the states and territories still having jurisdiction over all credit outside mortgages and margin lending. “It is not self-evident that smaller loans such as personal loans are best regulated through a single national regime,” it states.
The Australasian Compliance Institute said that excluding credit products such as personal loans, credit cards, and car loans from transfer to the Commonwealth would mean many national and international companies that offer these products as well as mortgages “would still be exposed to differing state-based regulations and, therefore, additional compliance costs for these credit products”. It said there was anecdotal evidence that “predatory lending practices” are on the rise in these non-mortgage products.
The Consumer Action Law Centre said the splitting of regulation of mortgage credit from other forms of personal credit would be “impractical”. The CALC supports ASIC assuming oversight of consumer credit, and wants all credit providers to become a member of an ASIC-approved external dispute resolution scheme.
The Mortgage and Finance Association of Australia agrees and said splitting mortgages and margin lending from other forms of credit would increase the complexity of the regime. MFAA supports national licensing of finance brokers but not of credit providers
The ANZ Bank said amendments should be made to Chapter 7 of the Corporations Act to define the credit portion of margin loans as a financial product.