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Educational requirements on the increase

Lenders and Mortgage Brokers alike have broadly supported the Mortgage and Finance Association of Australia's recent expulsion of 1500 members who failed to meet minimum education standards.

The association on Tuesday expelled 1500 of its 13,000 members after they failed to meet a two-year deadline to show they had completed a mortgage broker's certificate course.

It has been said that this is the first step in a plan to increase the level of professionalism in the industry and improve the image of brokers ahead of tough government regulation due at the end of the year. Industry experts speculate that the minimum educational standard required for national licencing will increase further, requiring brokers to undertake the Diploma in Financial Services (Finance and Mortgage Broking Management).

The debate over industry standards has been going on for years. Phil Naylor, the head of the MFAA, says it has expelled 1,500 brokers to clean up the industry's image.

"The board of the Mortgage and Finance Association of Australia about two years ago decided that the minimum standard for membership would be that you had to at least have achieved a qualification which is course certificate four in mortgage and finance broking," he said.

"And we gave members quite some time to reach that standard - unfortunately around about 1,500 as of the 1st of September hadn't reached that standard, so we had no alternative but to cancel their memberships."

Mr Naylor says those who have not done the certificate four program have not demonstrated they understand mortgages and financial advising.

"If they haven't done the program, there's no evidence that they understand the different considerations they need to take into account in terms of laws relating to finance and mortgage broking, different loan products that are available, how to calculate service requirements and so forth," he said.

"There's a whole host of things in there that a basic mortgage broker really needs to know before they even start operating."

Mr Naylor says the expelled brokers can keep operating for now, but tighter legal controls are coming in soon.

"Legally they can, we can only ever control our membership. There is national credit legislation about to come into being later this year that will also set requirements for brokers and other people in the industry, but we think that most reputable lenders are fairly keen to see that their brokers belong to an appropriate industry body."

"So we think the fact that their membership with us has been ceased will not go unnoticed."

Nicole Rich from the Consumer Law Action Centre is hoping to see much tougher legal regulations come in with the new legislation.

"Under the new laws that are going through Parliament, ASIC's [the Australian Securities and Investments Commission] going to have responsibility for licensing or potentially taking licenses off people they want to a broker or an adviser and so on. But ASIC doesn't necessarily have enough powers to actually decide whether somebody shouldn't get a license because they're not competent," she said.

"They're quite limited in when they can and can't give a license, and so going forward into phase two of the development of these laws which will begin next year, we will be looking at actually pushing the Government to give ASIC the powers to be able to do that, and I think that the action by the professional association today does put some pressure on the Government and ASIC to make sure that they do their job of weeding out incompetent brokers and advisers from the industry."

 

 

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