 Providing independent guidance to customers is now a requirement to brokers.
Brokers will be fined or put to jail if found guilty for not providing consumers with independent guidance in finding the best home loan options, according to the Australian Securities and Investments Commission (ASIC).
“A conflict arises where an interest of the licensee conflicts with a legal obligation that the licensee owes to the client, including one that arises under the credit legislation,” ASIC said in a regulatory guide to the National Consumer Credit Protection Act.
Brokers who breach those obligations will deal with heavy fines for a maximum of $11,000 or two years in jail or both. If the violation is committed by a company penalty can reach $1.1m.
The Commonwealth Bank Group requires brokers to yield at least four mortgage applications and clear up a minimum of three loans every six months while Westpac needs at least one loan settled in the same duration.
There were complaints for these practices submitted to the ACCC last year but remained futile after the case was dismissed. Another complaint was taken up recently by FBAA with the Australian Broker yet no further proceedings are seen.
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