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ISCOVER
Staff Reporter
National Mortgage Brokers' managing director Gerald Foley is calling on the government to review the National Consumer Credit Protection Act and make some “necessary enhancements”.
According to Mr Foley, one obvious pitfall of the NCCP is that it treats all consumers in the same way when it comes to their starting knowledge base.
Mr Foley believes this concept is worth reviewing and is calling on the government to adopt the idea of "sophisticated investors" into the legislation.
“Within the investment market the concept of 'sophisticated investors' has been acknowledged by ASIC,” he said.
“Simply, where an investor meets the criteria of gross income of $250,000 or more in each of the past two years or has net assets of over $2.5m, an advisor is able to deem that an investor meeting one of these criteria is more likely to be able to evaluate offers of securities and some financial products without needing the protection of a regulated disclosure document. Confirmation of a person meeting the 'sophisticated investor' rules is obtained via a certificate provided by a qualified accountant.
“Through our broker audit process, we see many files where the borrower is arranging their third, fourth or greater home or investment property loan, and has significant incomes and/or a strong asset position. For these customers I see no reason why similar guidelines to 'sophisticated investor' rules could not be applied.
“Any proposed 'sophisticated borrower' guidelines should exclude the family home under the definition of net assets, otherwise, for a person to be earning such an income and be in a strong net asset position excluding the family home, the full obligations imposed under the NCCP should be reduced for their ease and that of the broker and lender.”
Mr Foley said he was “hopeful” that the next round of reviews into the impact and effectiveness of the NCCP will recognise that the protection afforded under the legislation is not required by all consumers.
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