This article is from the Australian Property Journal archive
A PARLIAMENTARY Inquiry Report on Lending Practices and Processes tabled in Federal Parliament yesterday, has received mixed reactions from industry groups.
The Mortgage and Finance Association of Australia welcomed the inquiry, chief executive Phil Naylor adding it has made worthwhile recommendations to protect home buyers.
“It was our view and submission that the Committee should focus its recommendations on actions to deal with the very small minority of lenders which prey on vulnerable borrowers (‘predatory lenders’).
“In fact several months before this Inquiry the MFAA wrote to all state and territory regulators requesting that they legislate that all credit providers belong to an ASIC approved External Disputes Resolution Scheme.
“This would mean that borrowers who are taken advantage of by these unscrupulous lenders are able to seek recompense without incurring legal costs,” he added.
Naylor said MFAA members, which include some 12,000 brokers and all the significant non bank lenders, already are required, under the MFAA Code of Practice, to belong to such a scheme.
“MFAA has also joined with consumer groups and other industry associations in a forum to fight predatory lending. Although these lenders write only a minute percentage of total loans, this is cold comfort to their victims,” he added.
However, Naylor said the recommendation to regulate mortgage and finance brokers is somewhat bemusing and frustrating.
“Where has the federal government and opposition been for the last five years while the MFAA has been publicly calling for regulation? Their inaction has led the MFAA and consumer groups to work with state and territory governments on nationally consistent regulation, a draft of which is expected to be released soon. Nevertheless, we support the recommendation,” he added.
Meanwhile, Naylor said there has been an avalanche of misinformation about ‘mortgage stress’ over recent months.
In fact, evidence before the Inquiry clearly shows that only 0.2% of loans are in default and the overwhelming percentage of borrowers are managing their mortgages well.
Naylor has endorsed the recommendation the Australian Bureau of Statistics collects more meaningful data on repossession actions.
Industry group HIA was disappointed with yesterday’s inquiry. HIA’s managing director, Dr Ron Silberberg, said the report promised more ‘red tape’ in what is already a highly regulated industry, but offered nothing by way of practical assistance to would-be home buyers.
“The inquiry has missed the point. There is a need to look at providing education, information and advice to consumers not more red tape,” he added.
In its submission to the inquiry, HIA called for an extension of the Australian Government Financial Literacy Program. An extension of the program would ensure that first time home loan applicants would receive free, independent financial advice.
Australian Property Journal
