Rogue finance brokers could face hefty fines

A key finance broking group has called on state and federal governments to consult with the industry before going ahead with a tough new licensing regime.

Finance Brokers Association of Australia national vice president Peter White says attempts to create a more comprehensive legal framework for the finance broking industry are welcome, but the industry needs to be involved to ensure any new laws are effective and workable.

“The states have been trying to get this issue right for several years and there is no comfort that they’ll get it right,” White says. “They’re currently working with a limited mindset in terms of the impact on the marketplace, so there needs to be strong communication with bodies like FBAA to get this right.”

Under the proposed laws, finance brokers could face new licensing, professional education and source of commission disclosure obligations, backed by a tough fine regime.

The idea being discussed would see uniform legislation introduced by each state and territory government to effectively introduce a national licensing regime for finance brokers, The Australian Financial Review reports.

However, the FBAA’s White says he has no confidence that the states will be able to agree on uniform legislation.

“The states have been mucking around forever and a day. Some of the states have hidden agendas other than looking after consumers, and there is a good chance the outcome will be a system that is too complex and that has gaps that rogues in the industry could exploit.”

It would be preferable, White says, for the Federal Government to take hold of the process and move towards introducing a genuinely consistent national regime.

White says there is a genuine need for change, and the industry will welcome a fair regime – even if it does involve tough penalties.

“You can’t let people break the rules and just get away with a slap on the wrist. That would be real waste of time, to bring it in without penalties. At the moment we lack proper accountabilities – we need to get rid of the cowboys and people lying and cheating.”