The WA Minister for Consumer Protection has announced that a revised finance brokers Code of Conduct is anticipated to commence on 29 June 2007.
The final form of the Code of Conduct has been released to allow industry time to prepare for its commencement. It is likely that the Code will be brought into operation by virtue of a regulation with effect on 29 June 2007.
Gadens has prepared a summary of the Code of Conduct for the MFAA which can be accessed by clicking here
The key initiatives of the Code are to set out:
general obligations for all finance brokers to act in the best interest of the borrower; and
a disclosure regime for restricted finance broking activities (A, B, and C class licenses) under which brokers need to obtain a written acknowledgement (the MFAA recommends a finance broking contract). These disclosures are divided into a first disclosure and a second disclosure. Depending on their business model, brokers may be able to combine the disclosures into a single document when taken together with the loan contract.
Remember that the WA regime relates to both UCCC regulated and unregulated loans.
Finance Broking Contract
The MFAA and Gadens are developing an FBC specifically for use in WA and also (hopefully) a national FBC which will comply with the NSW, ACT, and Victorian legislation as well.
Many large originators and aggregators have special requirements and will need assistance to develop their own specific FBC tailored to meet the disclosure requirements which apply to their specific businesses. Contact us now to get drafting of your FBCs underway!
DOCEP (Department of Consumer and Employment Protection WA) is stepping up its enforcement of the requirement for finance brokers to hold a licence. A licence is required for both UCCC regulated and unregulated loans where the borrower is a resident of WA or where the transaction has a sufficient nexus with WA.
DOCEP takes the view that licences must be held not only by intermediaries who deal directly with the borrower, but also up the line entities such as aggregators, master servicers, and mortgage trust managers.
There appears to be some east coast based businesses which have not yet obtained a licence. These businesses risk being ordered by DOCEP to cease trading.
If you are uncertain whether your business requires to be licensed, Gadens can assist you. We can also assist you obtain a licence.
Article by Jon Denovan, Sydney.
t (02) 9931 4927
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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