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Jessica Darnbrough
The Mortgage & Finance Association of Australia (MFAA) has argued that the exemption of retailers from the National Consumer Credit Protection Act (NCCP) is weak.
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MFAA chief executive Phil Naylor told The Adviser that retailers such as vehicle finance professionals and home furniture salesman should not be exempt from the NCCP provisions.
According to Mr Naylor, when the legislation was first introduced, retailers like Harvey Norman and car salesmen were given a “temporary exemption” from the Act under the guise that they would eventually fall under the same regulations as everybody else.
However, more than two years on, these particular credit advisers are still exempt from the Act – a position the MFAA is strongly against.
Over the past couple of months, the MFAA has met many times with the government and the Australian Securities and Investments Commission to push for these retailers to be subject to the Act.
Only this week, the MFAA made a submission to government which actively calls for all credit advisers to be included in the NCCP.
“The basic premise of the group was that, while there were differences about the look of the ultimate legislation, it should be ‘all-in’. That is to say there should be no exemptions. That was certainly the view of the MFAA and our strong support of the legislation proceeding was underpinned by this basic premise,” the submission read.
Mr Naylor went on to tell The Adviser that any exemptions suggest the NCCP Act itself is weak and biased.
“It is not fair to brokers to have some credit advisers exempt and not others. We are working hard to ensure that all credit professionals work within the confines of the legislation,” he said.
“These retailers, especially car salesmen who offer car finance to borrowers, are working within the ‘credit advice industry’ and, as such, should be covered by the same legislation. It is not fair to leave some out and not others.”
Mr Naylor said the MFAA’s key concern was that ‘suppliers’ representatives’ will be subject to less stringent regulatory requirements than would be the case if a consumer went to another financial institution (such as a bank or credit union) or a broker, all of whom are competing in the same market.
“The loans officer in the bank or credit union is totally covered by the NCCP requirements as is the broker; the supplier’s representative is not,” he said.
“We think that the concerns of retailers may be best accommodated not by a general exemption but by a carve out that does not cover loan contracts for amounts of less than, say, $5,000. This would significantly reduce the possible negative impact on consumer protection of a general exemption.”
