On 5 May 2006 the Western Australian Government proclaimed a regulation removing the requirement for a WA-licensed finance broker to be resident in WA.
Non-WA companies can now obtain a licence when they have no WA resident directors, but one or two of the directors will need to obtain an individual WA finance brokers licence.
WA is still considering the "up the line" exemption and the "responsible officer" exemption.
The Finance Brokers Control Act requires finance brokers who lend to WA residents or conduct business in WA to be licensed in WA. "Finance broker" is widely defined and includes intermediaries or managers in respect of both loans regulated and not regulated by the Uniform Consumer Credit Code.
Two exemptions have been sought, both of which are still under consideration.
The "up the line" exemption
There are many intermediaries such as mortgage trust managers, aggregators, securitisation managers, and mortgage managers who lend to WA residents. They argue that they should not be required to be licensed because they distribute only through licensed brokers or because they act as a lender. In this sense, they are said to be "up the line".
Example: Trust Manager Co manages the Big Mortgage Trust. The lender/mortgagee of record is a trustee company. Trust Manager Co should not need to be licensed as it is not acting as a broker, rather it acts as a quasi lender.
The "responsible officer" exemption
National broker groups who distribute in WA may find it impractical to satisfy the existing requirement that one or two directors must be resident WA-licensed finance brokers.
Example: Big Broker Pty Limited markets loans under its name in WA. Big Broker’s directors all live in NSW. Under the existing law Big Broker cannot obtain a licence in WA.
The new exemption
The exemption provides that an individual (ie, a natural person) who is an Australian resident can obtain an individual licence although not resident in WA.
Under s29, a company can obtain a licence if:
the company has three or less directors, at least one is licensed;
the company has more than three directors, at least two are licensed.
The main requirements to obtain a licence are:
be 18 years or older;
be a fit and proper person to hold a licence;
understand the duties and obligations imposed by the Act on finance brokers;
completion of Certificate 4 in Financial Services (Finance/Mortgage Broking) including relevant supplementary Western Australia material provided by an approved training provider;
two years full time relevant experience in the preceding five years.
The Department of Consumer and Employment Protection considers that any broking entity through which commission passes should be licensed. This means aggregators who distribute in WA through licensed sub-contractors in WA will themselves need to be licensed.
Some companies may still find it difficult to have one or two directors licensed. For this reason, the responsible officer exemption is still being considered. By Jon Denovan
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This publication is provided to clients and correspondents for their information on a complimentary basis. It represents a brief summary of the law applicable as at the date of publication and should not be relied on as a definitive or complete statement of the relevant laws.
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