1500 Mortgage Brokers Expelled

Written by Geoffrey Newman, Wealth editor | September 09, 2009
Article from:  The Australian

THE peak body for mortgage brokers yesterday expelled 1500 of its members after they failed to meet a two-year deadline to show they had attained a minimum standard of education.

Mortgage and Finance Association of Australia chief executive Phil Naylor said the move was a first step in raising the level of professionalism in the industry and improving the image of brokers.

That image has been tarnished by predatory lending practices in some corners of the industry.
"The MFAA makes no apologies for setting the bar high when it comes to professional standards," Mr Naylor said.

The industry is also feeling the heat from attacks on remuneration practices in the financial planning industry. The payment of commissions is the lifeblood of both.
Although the MFAA move did not stop brokers from operating, it would limit what organisations they could deal with, as many reputable lenders required brokers to have membership of a professional association, Mr Naylor said.
The MFAA is the principal representative body for mortgage brokers, with 13,000 members before the expulsions.

The move comes ahead of the introduction of the National Consumer Credit Protection Act, which will regulate mortgage brokers for the first time at a national level. It will be policed by the Australian Securities and Investments Commission and requires all providers of credit to lend responsibly.
ASIC said last week it intended to interpret the bill -- expected to become law by the end of the year -- in a way that required the lender to carefully tailor a loan to a borrower's objectives and ability to pay.
Mr Naylor said the MFAA intended to set a standard for its members higher than that required under the law and would introduce a diploma-level minimum education standard in the next few years.

Mr Naylor said it was unacceptable for brokers not to have completed the required Certificate IV in Financial Services or its equivalent, since the requirement was first announced in 2007 and it was not onerous and could be completed in a few weeks, even by correspondence.

The certificate has been a pre-requisite for new members of the MFAA since that time.

Mr Naylor said last night the action had prompted some members to send in proof of their certificates, but he expected that expulsions would remain well over 1000. Membership can be reinstated if certificates are completed within three months.  

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