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Australia’s corporate regulator has launched an inquiry to determine whether or not CHOICE’s decision to break into broking breaches consumer protection laws.
According to an article in The Australian Financial Review, The Australian Securities and Investment Commission is currently looking to find out whether or not CHOICE’s involvement in the Big Bank Switch campaign means the consumer advocate needs to obtain a credit licence.
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Earlier this month, the self proclaimed ‘people’s watchdog’ teamed up with One Big Switch to launch the Big Bank Switch campaign, that encourages home buyers to find a better deal on their mortgage.
One Big Switch said if more than 1,000 home buyers registered their interest they would be able to use the mass bargaining power to negotiate interest rate deals directly with lenders.
More than 40,000 people have now registered their interest in the campaign.
Speaking to The Adviser earlier this month, One Big Switch founder Lachlan Harris said the new campaign was designed to help everyday Australians seek a better deal on their mortgage.
“We want to talk to every lender and see if we can’t champion for better mortgage rates,” he said.
“We won’t just talk to the majors, but non-bank lenders as well.”
While One Big Switch does hold a credit licence, ASIC is currently examining whether or not the company and its referral partner CHOICE are compliant with responsible lending laws.
While Mr Harris declined to confirm whether or not ASIC had launched an investigation into the new campaign, he said he was confident the company was compliant with all the laws.
“I am confident we are successfully meeting all the requirements outlined under NCCP,” he said.
But while Mr Harris is confident his company is adhering to all legislative requirements, brokers are not so sure.
Last week brokers raised their concerns to The Adviser and said no brokerage could possibly refinance 40,000 plus borrowers into a mortgage product that is "not unsuitable".
According to The Adviser's latest straw poll, more than 93 per cent of brokers do not believe CHOICE should be dabbling in mortgage broking.
Of the 614 respondents, just 6.2 per cent said they did not have a problem with CHOICE getting involved in third party distribution, while the vast majority were completely against the idea.
Jonathan Oxlade of Total Choice Home Loans said it was "hypocritical" of CHOICE to enter the world of mortgage broking.
"This so called consumer advocate, who regularly complains of the lack of compliance / regulation in the industry, is now using their trusted status to solicit business as a mortgage broker without following the legislation themselves. Do they think they are above the law?," he said.
