As the implementation of legislation draws closer, many aggregators are yet to clarify their position on licensing.
The first group to step forward and outline its licensing stance was Advantedge, making an announcement in March. The mortgage management and aggregation business will give those brokers aligned under its aggregation arm a choice.
Advantedge’s brokers will be able to either obtain their own Australian Credit Licence (ACL) or apply to become a credit representative of an Advantedge ACL holder.
While brokers have until 31 December to apply for a credit licence, Advantedge’s ‘choice’ model certainly provides brokers with food for thought.
Brokers still have time to consider their options and weigh up the implications that each licensing model will have on their business as well as their bottom line.
The potential cost to brokers to ensure compliance under the licensing regime has sparked heated debate across the industry.
Brokers that become credit representatives of an ACL holder could face ongoing annual fees from their aggregator.
On the flipside, brokers that seek their own credit licence under the new regime could be faced with a significant application fee.
While ASIC has released a general costing specification, the industry is speculating that the one-off licensing fee could sit at anywhere from $450-$26,250.
If the latter holds true, many brokers that want to obtain their own ACL could find themselves priced out of the market.
But aside from the potential cost of regulation, brokers are also concerned that the new licensing regime could result in industry overregulation.
According to a recent The Adviser straw poll, 63.3 per cent of the 442 brokers polled believed that impending regulation could result in overregulation.
Under the new licensing regime, brokers will be required to disclose detailed information about loan products to their clients. Many feel these new disclosure requirements could far exceed their current responsible lending requirements – putting extra pressure on them and their increasing workload.
ASIC is yet to confirm exactly what impact the new licensing laws will have on brokers, and until that information becomes readily available the legislation will remain a daunting prospect for many.
Guessing what the future holds in terms of licensing is a little bit like playing pin the tail on the donkey – no-one knows how close they are to the mark until the blindfold comes off.
But before the blindfold does come off, one thing is clear: we should start to see a lot more aggregators follow Advantedge’s lead and reveal their position on licensing.
By Jessica Darnbrough
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