Australia’s peak body representing finance and mortgage brokers has sought to reaffirm its position around proposed amendments to responsible lending laws, following comments in Parliament during the second reading of the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020. 

Responding to conflicting claims of industry support by both Government and Opposition MPs, managing director of the Finance Brokers Association of Australia (FBAA) Peter White AM, confirmed that finance brokers support the legislation in principle, however the role of ASIC is a major stumbling block.

“We agree with the Government that consumer lending is too complicated and the process is difficult for borrowers who can genuinely afford finance,” he said.

“However there is a serious concern about the lack of consistency around regulation, as it is proposed that banks are to be regulated through APRA, while non-banks are governed by ASIC.”

He said ASIC has continually shown that it attempts to overrule the law and go beyond its mandate rather than simply regulating the law as written.

“APRA governing banks on responsible lending is fine, but ASIC giving guidance to non-banks as proposed, is an issue that may cause an imbalance in the marketplace.

“Non-banks will risk being in an anticompetitive position compared to the banks because of ASIC’s guidance in the future.”

He said the FBAA has a similar issue with the extension to Best Interest Duty (BID) which is also on the table.

“ASIC is already showing they are uplifting the laws on the extension of BID before it happens, and will collapse the consumer asset broking sector which includes car loans,” Mr White explained.

The biggest problem with the legislation is the inconsistency, according to the broking body who believes that the extension of BID will leave consumers in the hands of car dealers and banks without competition or best interests being given by a broker.

“Responsible lending has always been in place with banks, but we fear consumers will be disadvantaged under this legislation as banks will have one rule and non-banks – who have bought competition to the marketplace – will be under another rule from ASIC, making it harder to get a loan from a non-bank.”