Mortgage brokers in Australia may face jail terms or heavy fines under new consumer credit laws that dispute the obligations that some of the banks impose on them to meet mortgage sales targets, based on a report by the Australian Financial Review.
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The Mortgage & Finance Association of Australia (MFAA) has reported to the Australian Securities and Investments Commission that the home loan sales targets set by the Commonwealth Bank of Australia (CBA) and Westpac Banking Corporation are not in line with new law proposals, under which brokers are going to be licensed as credit representatives from July 1.
MFAA’s chief executive stressed that his body told regulators that the members were seeking advice on how to manage a perceived conflict of interest between the new legislation and the way they provide guidance.
The new National Consumer Credit Protection Act is made to ensure that all consumers receive independent guidance on which kind of loan best suits their needs, regardless of any type of agreement between the lenders and brokers they present.
According to the report, CBA and Westpac are proving unwilling to ease away from forcing brokers to meet their volume requirements in order to keep selling their mortgages.