8. August 2011 08:54
ASIC has today released proposals for modifying the training requirements for credit representatives who provide credit assistance to consumers on home loans.
The proposals address some recent industry concern about the training requirements. ASIC believes the proposals strike an appropriate balance between the interests of confident and informed financial consumers and the regulatory obligations of market participants.
‘Home loans are the largest loan most consumers will take on, and poorly informed assistance leading to poor decisions about mortgages could potentially jeopardise ownership of the family home,’ ASIC commissioner, Peter Boxall, said.
‘The proposals aim to reduce licensees’ compliance burden, while still ensuring a high standard of training for those who do play a significant role in such decisions.’
Consultation Paper 165 Credit assistance for home loans: Competence and training requirements outlines proposed modifications of the training requirements for credit representatives who provide mortgage broking services, as currently set out in Regulatory Guide 206 Credit licensing: Competence and training.
As the definition of ‘mortgage broking services’ used in RG 206 is broad, in practice it may capture a wide range of representatives, some of whom may have no involvement in or influence over consumers’ decision making on the amount, type or source of a loan. There is concern that training a significant number of such representatives to the Certificate IV level might represent a compliance burden for some parts of industry, which could outweigh the regulatory benefit of this requirement.
CP 165 proposes two possible modifications to RG 206:
- refining the definition of ‘mortgage broking’ in RG 206, so that it is limited to providing credit assistance in the form of ‘suggesting’, where credit is secured by real property; and/or
- allowing those falling within the definition of mortgage broking who provide services on behalf of a particular credit provider to undertake a proportion of the Certificate IV in Finance and Mortgage Broking.
Depending on the feedback received, ASIC proposes to implement one or both of these approaches.
‘Our proposed changes to the training requirements should enable representatives of credit providers who are providing mortgage broking services to focus on units of training most relevant to their roles,’ Dr Boxall said.
While ASIC understands that credit licensees would like certainty on this issue as soon as possible, ASIC reminds industry that it has provided a transition period for representatives who provide mortgage broking services, giving them until 30 June 2014 to obtain a Certificate IV in Finance and Mortgage Broking. ASIC is confident that this will provide an adequate period of time for all affected credit licensees to ensure that their representatives meet the requirements of RG 206.
Submissions to CP 165 close on Friday, 16 September 2011.
RG 206 sets out ASIC’s minimum expectations on how credit licensees must maintain organisational competence and ensure that their representatives are adequately trained.
Generally, ASIC has provided licensees with discretion to determine the appropriate level of training for their representatives. However, ASIC has set a minimum standard for representatives who provide ‘mortgage broking services’. RG 206 defines ‘mortgage broking services’ as ‘credit assistance in relation to a credit product where the credit is secured by real property’. This captures both those working in intermediary firms (often referred to as mortgage brokers), as well as those who work within or for credit providers. All those who provide such mortgage broking services need to have at least a Certificate IV in Finance and Mortgage Broking.