Following up on its recent review of interest-only home loans provided by major lenders, the Australian Securities and Investments Commission (ASIC) is now moving to look into the same products provided by mortgage brokers.
Michael Saadat, ASIC senior executive leader, noted that consumers were calling out for the new review after the release of the findings from the major lenders inquiry in August 2015.
“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,” Mr Saadat said, at the FBAA conference, as reported by Australian Broker Online on November 16.
The recent reviews come as part of a push from Prime Minister Malcolm Turnbull and Treasurer Scott Morrison’s plan to protect financial consumers, after the new government accepted all but one of the 44 recommendations of the Murray Review.
By the end of 2016, ASIC will be granted greater powers to eradicate defective financial products, something that industry observers feel is long overdue.
“ASIC hasn’t had the full set of powers that it needs in order to step in as early as possible when it sees problems,” Alan Kirkland, CHOICE chief executive, told The New Daily in October 2015.
Mr Saadat commented that while it’s important to note that both lenders and brokers have their own particular obligations to consumers, responsible brokers were already meeting their end of the bargain.
“Brokers also tell us that the information ASIC says needs to be collected […] is information that brokers are already collecting as a part of their normal process with their clients,” he said.
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