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Jessica Darnbrough
From 1 March 2013, mortgage brokers will no longer be able to refer to themselves as “independent”, according to new enhancements made to the NCCP Act.
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Yesterday, Gadens Lawyers released a summary of changes that have been made to the National Consumer Credit Protection Act.
Among the changes was a restriction on the use of the term “independent”.
According to the legislation enhancements, brokers will not legally be allowed to refer to themselves as “independent” if they receive commissions that are not 100 per cent rebated to the customer.
In addition, brokers are unable to use words such as “financial counsellor” or “financial counselling” unless they have been given exemption by the regulator.
Speaking to The Adviser, Gadens partner Jon Denovan said the enhancements were “overkill” and there were no apparent commercial or legal reasons behind the changes.
“I believe the enhancements are overkill. There is no evidence of borrowers being ripped off by brokers that set their stall up on their ‘independence’,” Mr Denovan said.
“We do not believe the original NCCP requirements have been given the necessary time to settle down and be truly embraced before these enhancements have been made.”
Mr Denovan said Gadens was working on behalf of the MFAA and spent time opposing “almost all” of the enhancements to no avail.
“We have been opposing everything, but the changes are still going ahead. If a broker or brokerage group can prove to ASIC that they have a business model which stops them from being affected by lender commissions, then they could be eligible for an exemption, which would allow them to continue to use the title ‘independent’ and ‘impartial’,” he said.
