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Industry heavyweight Challenger has called on the federal government to ensure the National Consumer Credit Protection legislation does not discriminate or disadvantage the third-party distribution channel.
In a submission to the government Challenger said it was concerned to ensure the legislation did not result in a more complicated process for borrowers who chose to use brokers or mortgage managers.
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Under the proposed law, brokers are required to verify borrowers’ documentation however Challenger said this should be the responsibility of the end credit provider and that placing the responsibility in the hands of brokers and mortgage managers would result in a duplicative process.
“If brokers, as a distribution channel, are placed at a competitive disadvantage compared to the direct-to-lender channel as a result of differing or unnecessary duplication of processes... then there is a risk of creating a distortion that may result in borrowers favouring the direct channel,” the submission said.
Challenger also urged the government to ensure the proposed licensing system includes provisions for different classes of licenses to ensure they are accessible and affordable for smaller players.
“We note that the vast majority of brokers... are small businesses... [who] would typically not have available resources or capabilities to devote towards any license application process which requires extensive advice or involvement from third parties such as lawyers,” Challenger said.
Steve Weston, Challenger general manager of distribution, broker platforms and lending, told Mortgage Business that Challenger had made the submission in order to support its third-party partners.
“With our significant stake in the industry, we felt it was our responsibility to ensure the legislation provides what it is intended to.”
Mr Weston expressed confidence that with some small changes the legislation would provide a good outcome for the industry.
