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The broking franchise group has called on Treasury to introduce prescriptive subordinate regulations for matters where there is a “clear consensus” regarding proper or prohibited forms of conduct.
Aussie Home Loans has published its submission to Treasury as part of the consultation process for the government’s National Consumer Credit Protection Amendment (Mortgage Brokers) Bill 2019.
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The draft bill contains a new ‘principles-based’ best interests duty obligation on mortgage brokers, as recommended by commissioner Kenneth Hayne in the final report of the banking royal commission.
In its submission to Treasury, Aussie expressed support for the general principles-based approach to the reforms but called for some elements of prescription within the legislation.
“[For] such an important obligation and given the universally held view that it is necessary for ensuring good customer outcomes for consumers, there ought to be some prescriptive subordinate regulation in support of the principles-based approach,” Aussie noted.
“The subordinate regulation should at least address those matters where there is a clear consensus of the right way to do things or the prohibited forms of conduct in relation to acting in the best interests of the consumer.”
The brokerage added that a “less preferable” alternative to prescriptive measures could be “guidance on how the principles are to be satisfied” from the Australian Securities and Investments Commission (ASIC).
“This would be analogous to the current regulatory guidance in respect of the responsible lending requirements under the National Consumer Protection Act 2009,” Aussie stated.
“Aussie would welcome the opportunity to work with ASIC to develop such regulatory guidance which should seek to clarify best interest duty requirements and provide examples of how these may differ from existing responsible lending requirements as outlined in RG209 Credit licensing: Responsible Lending Conduct and the act.
“This is particularly important given section 158KC of the draft bill, which expressly states that ‘the obligations imposed on a person under this part are in addition to any other obligations to which the person is subject under this act or any other law’ – in other words, best interest duty is designed to be additional and not substitutional to any existing responsible lending obligations.”
Among the provisions that Aussie has requested greater prescription or guidance about include:
- Whether ‘best value’ equates to cheapest;
- What constitutes a reasonable comparison of credit products; and
- What constitutes credit assistance post-settlement.
Following the publication of the submission, Aussie CEO James Symond said: “Best interests duty is at the forefront of what we do in delivering great outcomes for our customers.
“We continue to invest in building a safer and stronger Aussie, with our focus on our customers through the support of more than 900 brokers and over 200 stores across Australia.
“Aussie have established an internal working group to explore how our current sales processes, customer documents and technology might need to be adapted to ensure [best interest duty] obligations are met.”
He concluded: “It is imperative that Aussie and other brokers continue to put the customer first and provide much needed competition in the home loan market.”
[Related: Suncorp highlights broker utility in Treasury submission]
