Brokers may avoid selling low and no doc loans under proposed national industry legislation, broker groups have warned.
According to The Australian Financial Review, broker groups have welcomed national regulation but fear the proposed legislation would stamp out low and no doc loans due to excessive liability placed on brokers.
Under the proposed legislation, borrowers in dispute with brokers would be able to take their case to the Supreme Court to prevent lenders from repossessing their home.
The broking sector said this would severely raise professional indemnity costs for mortgage and finance brokers and deter them from recommending these products.
“To lay 100 per cent of the blame on a broker for a loan default is ridiculous,” chief executive of X Inc Jennifer Nielsen told The Australian Financial Review.
“If passed, this bill may lead brokers to avoid recommending these loans,” she said.
According to the daily, Mortgage Choice and Australian Finance Group also expressed similar concerns.
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