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ASIC: Commission review an ‘impost to industry’

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Reporter 5 minute read

The Australian Securities and Investments Commission has acknowledged that the current review into broker remuneration has been an “impost to industry” and a challenge to undertake.

Providing a regulator update at the FBAA 2016 National Industry Conference last week, Chris Green, ASIC’s group senior manager, credit, revealed that the body had a “good relationship with the FBAA” and provided an update on what ASIC was doing.

Touching on the mortgage broker remuneration review, Mr Green conceded that “determining the effect of the current remuneration structures on the quality of consumer outcomes” had been “pretty difficult to do”.

He said: “It’s been quite an extensive process. Our main objective in the year we've been undertaking this [has been] to get a nice clear picture of what is happening in the industry, so we've collected information about the broking channel but also the proprietary channel from the lenders, so there is comparing and contrasting where that needs to happen.”

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Mr Green said that the information requested through the lenders and “other people in the chain” was “very extensive” and that the commission had “tried to make that match up as best [it] could to information that was being collected for other purposes as well, so it wasn’t too much of an impost on industry”.

However, he added: “But we realise that it was, and we really appreciate the efforts of the entities involved in giving us the information”.

Mr Green said that although the Australian Prudential Regulation Authority (APRA) collects a lot of data on loans, “ASIC has tended not to do that, or at least not to do that on a systemic, recurring basis”.

“So, its quite a different exercise for us,” Mr Green added, “and we’ve had to create new computer systems to cope with it.”

Indeed, according to Mr Green, the review has been so data-heavy that “some of the funding that the government is giving [ASIC] is to bring out the ‘state-of-the-art’ 1980s infrastructure and bring it up-to-date”.

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According to ASIC’s senior manager, the report will not be generated by the body or be accompanied by a press release, but will be “given to the government”. However, Mr Green said he understood that government will publish the report, and as such the commission is preparing it “in a form that is able to be published”.

Mr Green concluded: “We are working on it now, and it might be an early Christmas present for the minster [for financial services] and provide some Boxing Day reading. 

“I can’t say much more, except it will say some things about ongoing work that we want to do following this review, as well as the future role of the market.”

Looking to the future, Mr Green said that ASIC will continue to focus on responsible lending, and will also focus on payday lending, consumer leasing, as well as loan fraud.

“We're concerned about loan fraud, and I’m sure you are too,” Mr Green told delegates at the FBAA conference.

“We take quite a bit of action to remove people from the industry who shouldn’t be there and we'll be looking to try and think about ways to try and make that process of keeping the right people in the industry and the wrong people out of the industry a little more sensible.”

[Related: ASIC review ‘unlikely to result in strategic shift’]

ASIC: Commission review an ‘impost to industry’
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