On 6 February 2020, the Financial Sector Reform (Hayne Royal Commission Response – Protecting Consumers (2019 Measures) Bill 2019 (Bill) passed in Parliament. The Bill gives effect to recommendations 4.7 and 4.2 of the Hayne Royal Commission by amending the National Consumer Credit Protection Act 2009 (Cth) (NCCP) and the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) to mandate that mortgage brokers and credit representatives must act in the ‘best interests’ of consumers and also prohibits them from receiving ‘conflicted remuneration’.
Meanwhile, The Treasury is currently consulting on a new and onerous breach reporting regime that will apply to financial services and credit licence holders. There are also new obligations which will be placed on credit licence holders to check and provide references in relation to mortgage brokers, which are designed to limit (using the language of the Hong Kong and United Kingdom’s regulators) ‘rolling bad apples’ in the industry. The consultations for those reforms will end on 28 February 2020.
All of these changes will come into effect by 1 July 2020. Before then, credit providers, intermediaries and mortgage brokers need to ensure they have established appropriate systems and processes, as there will be civil penalties of up to $1.05M for breaches of the law.
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Susan Forrest, Partner
Craig Green, Partner
Victor Asoyo, Partner