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ISCOVER
Jessica Darnbrough
CHOICE’s move into mortgage broking has been questioned by the third party distribution channel.
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Yesterday, the consumer advocate launched a new campaign, commonly referred to as ‘One Big Switch’, that encourages home buyers to find a better deal on their mortgage.
More than 10,000 home buyers have already registered their interest on the CHOICE website, indicating they would like to find a cheaper mortgage rate.
MFAA chief executive Phil Naylor told The Adviser that if CHOICE and One Big Switch push ahead with their plans to negotiate better mortgage rates for Australian home buyers, they will want to make sure they abide by the National Consumer Credit Protection Act.
“Refinancing home buyers into another mortgage is not as simple as it seems. Brokers are required to sit down with their clients, discuss their financial needs and then find a loan that is not ‘unsuitable’,” he said.
“If CHOICE does not abide by the NCCP, they will feel the full force of ASIC.”
Mr Naylor wasn’t the only one to question the company’s ability to meet the compliance requirements.
Yesterday, The Adviser was inundated by responses from concerned brokers.
Alpha Lending’s Darren Brits said he could not understand how the mortgage campaign had not caught the immediate attention of ASIC.
“Under NCCP regulations it is a requirement that any borrower or potential borrower be assessed as having a loan that is "not unsuitable". Who is to assess this? Assuming as stated that 10,000 people have registered, this is 10,000 people from all walks of life, some with arrears, some with defaults, and some with changing employment.
"Some live in areas where property values have dropped (or failed to increase) significantly, which would push LVR's in to LMI territory, so a refinance could go from what was originally say a 75 per cent LVR to a 82 per cent LVR for example due to decreased property values.
"Moreover, some borrowers who have registered, are possibly self employed, who lack financials (up to date) or who cannot substantiate their earnings, so again I ask - who is to assess the "not unsuitable clause" here?,” he said.
But One Big Switch founder Lachlan Harris was quick to dismiss any concerns, and said the company would meet all legislative requirements.
“I am confident we are successfully meeting all the requirements outlined under NCCP,” he said.
