Law To Curb Mortgage Brokers Delayed
Sydney Morning Herald
Monday January 7, 2008
A DECISION on introducing a law to eliminate dodgy mortgage brokers is months away, and if it was passed it would be unlikely to come into effect until next year.
The state Opposition is calling on the NSW Government to bring forward a meeting of state and federal ministers set for April or May that is expected to give approval to the law. It says the law could stop people paying excessive interest and help prevent further interest rate rises.The NSW Government is preparing a bill that would be adopted uniformly around the country to set up a licensing scheme for mortgage brokers for the first time. It made the draft public in November.The legislation would allow checks on those wishing to enter the industry and would make it possible to expel anyone involved in unseemly practices.Brokers would have to disclose their costs before negotiating a mortgage and would have to compensate mortgagees for losses if too much had been borrowed on their recommendation. Proposals for licences for mortgage brokers have been around since 2003, when a ministerial council meeting decided to create a national system. At present, unscrupulous brokers can be expelled from the Mortgage & Finance Association of Australia but can remain in the industry. The ministerial meeting is likely to be an early test of whether nationwide Labor governments can produce greater co-operation.The NSW Opposition's spokeswoman on fair trading, Catherine Cusack, said the Government had dragged its feet on the law and needed to bring the meeting forward. "They need to get this sorted out with a view to legislating in the first half of next year."The Minister for Fair Trading, Linda Burney, blamed the former federal government for holding up the legislation with its insistence on regulatory impact statements on any proposals. The difficulty of getting agreement across all states was another reason for the delay, she said.She said the ministerial meeting could not be brought forward but she was confident there would be agreement. "'I reckon we will see at the end of this year [or] early in 2009, national legislation that will require licensing. At the moment people can go in there [into the industry] and there's no checks and balances. There are shonks in there, and the whole idea behind this ... legislation is to get shonks out of the industry."You might be in trouble for a $70,000 mortgage, you go through these people to refinance and the interest rates and terms and conditions are so extreme that you end up in worse financial difficulty."There are situations where people are lending huge amounts of money to people who clearly can't afford the repayments."The chief executive of the Mortgage Finance Association, Phil Naylor, said the Government needed to move quickly after its consultation period for the draft bill ends on February 15. He blamed federal government delays and the difficulty getting agreement from all governments for the hold-up in the legislation, which his association had started lobbying for in 2002.
© 2008 Sydney Morning Herald