Mounting overhead costs and burdensome disclosure requirements are just two issues brokers are concerned about when licensing is introduced later this year.
According to The Adviser’s most recent straw poll, of 442 respondents, 63.3 per cent of brokers believe regulation could result in overregulation, while 31.3 per cent said it won’t and 5.4 per cent are unsure.
Under the new licensing regime, brokers would be required to disclose detailed information about loan products to their clients.
Many are concerned that these disclosure requirements will go beyond what is currently required, putting extra burden on brokers.
Another point for concern is overhead costs.
While full licensing costs have not yet been disclosed, many brokers are concerned that any costs associated with the new legislation will be too burdensome, resulting in industry wide consolidation.
“I welcome the proposed national industry regulation laws, but my concern is the cost that will be borne by brokers in complying with their new obligations,” Absolute Financial Services principal Gary Coxon told The Adviser.
Kemp Strang consultant Gary Ling agreed that expensive licensing costs could result in industry consolidation. “I wouldn’t be surprised to see many individual brokers form broker groups in order to share the costs associated with the new legislation,” Mr Ling told The Adviser.
While Mr Ling said the costs imposed on individual brokers could be considerable, he welcomed the legislation and said it was a step towards a new level of professionalism.
“Licensing can only serve to enhance the mortgage profession. I think brokers currently fear the unknown and they shouldn’t. They should focus instead on registration which will start in April,” he said.
FBAA president Peter White supported Mr Ling’s claims that the impending legislation should not be feared.
“Reform is not just happening in the mortgage broking industry, but it is occurring in relation to many providers of credit and credit services. [Broker licensing] is just the first stage of the national credit reforms, and it has taken about five to six years to get to this stage.... It has been a conscientious process,” Mr White said.
Mr White said the FBAA will be introducing a ‘tool kit’ for brokers in March this year to help brokers understand and comply with the new licensing laws.
“We are just waiting for ASIC to release its further regulatory guidance package, due out this month or early next. We aim to provide the tool kit to members once that information is released,” Mr White said.
The new tool kit will include core documents, and detailed information to assist brokers with meeting their compliance obligations.
However, the FBAA is not the only organisation helping brokers come to grips with legislation.
The Australian Securities and Investment Commission will be hosting a national roadshow, which will help credit providers and businesses involved in assisting consumers obtain credit comply with the new National Consumer Credit Protection laws.
The Roadshow will visit every state and territory capital and 24 regional centres from 15 February, and will kick off in Mackay.
The roadshow is free to attend, however, brokers are encouraged to RSVP in order to secure a seat.