The Queensland Government is proposing to implement an enforceable code of conduct which would require finance brokers to meet certain conduct standards in their dealings with clients.
The Government has indicated that the Fair Trading (Code of Practice - Finance Brokers) Regulation 2007 will be an interim measure until national regulation is enacted in 2009. The code is to set minimum behavioural standards for finance brokers consistent with those proposed nationally.
The proposed Queensland code will:
contain disclosure and statement of reasons provisions, requiring brokers to provide specified disclosures about costs and services before negotiating a broking agreement with the client. The disclosures must contain details of the client's credit needs and the statement of reasons must explain why the products recommended satisfy those credit needs
prevent brokers from demanding, receiving or accepting any commission from a client or potential client before securing their credit needs
prevent brokers from lodging a caveat over real property to secure a fee, commission or any other amount that is payable
include general behaviour provisions requiring finance brokers to act within the Fair Trading Act
require brokers to comply with all Queensland laws relating to confidentiality and privacy; and
require brokers to establish and maintain an internal dispute resolution process and inform borrowers and potential borrowers of its existence.
In relation to the legislation for the national regulation of finance brokers, it has been announced that a consultation Bill will be released later this year.
In Western Australia, the Department of Consumer and Employment Protection has released a revised code of conduct for finance brokers which commenced on 29 June 2007. Like the proposed Queensland code, the revised WA code introduces new safeguards for borrowers seeking loans through finance brokers.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
In the years following the global financial crisis of 2008 many Australian investors lost their life savings as financial products failed and the Australian Stock Exchange shed over 3,000 points.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).