Concerns of unqualified brokers entering the industry have been raised, following a dramatic rise in non-brokers obtaining Australian Credit Licences (ACLs).
In 2011 there were more than 20,000 ACLs and Australian credit representatives (ACRs) in the industry, with 92 per cent being accredited brokers, according to research by the FBAA.
Since then, the FBAA noted that combined ACL and ACR figures have increased to 39,000, with only 56 per cent of this figure “broker-trained”.
FBAA chief executive officer Peter White said he is concerned at the big increase in non-brokers holding this status.
“The total market of these credit licence and representative holders has climbed a staggering 88 per cent but the broker market has only risen 15 out of that 88 per cent,” he said.
“It’s a worry because these additional entrants in the consumer lending arena are not brokers per se and pose a concern as to conflicts of interest and possible poor advice.”
Mr White said many borrowers may succumb to a poor lending experience as a result of these people coming into the industry without the adequate amount of broker training.
“Who is really looking after their best practice interests and the regulatory issues that they need to deal with from a lending perspective?” he told The Adviser.
“Just because you may do a heap of hours of financial planning doesn’t equate and tick all the boxes for being a broker under the NCCP.
“If accountants, financial planners or anyone else in the industry want to act as brokers, you have to undergo specific and designated training to suit the needs of customers.”
Commenting on the FBAA’s claims, ASIC said all credit licensees have an obligation under the National Credit Act to maintain the competence to engage in credit activities authorised by their licence, and to ensure their representatives are adequately trained and competent to engage in credit activities authorised by the licence.
“Regulatory Guide 206 sets out ASIC’s expectations as to what is required of licensees to meet these obligations,” an ASIC spokesperson said.
ASIC’s rules state that credit representatives who provide mortgage broking services must have at least a Certificate IV in Financial Services and undertake not less than 20 hours of continuing professional development each year.