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Great article. If I could make one suggestion to ASIC it would be that as an ACL you have my email address....use it. To get some direct communication from ASIC would be better appreciated than having to read a press release.Just my 2 cents worth.
Well done Sam! This is a very comprehensive article & the focus on ''communication'' is well founded. Unfortunately if I were to play ''devils advocate'' I would say that brokers naturally consider the position from their perspective solely. A case example of this is the APRA direction given in that good media release 20/7/15 on of regulatory changes regarding 'Capital Adequacy Ratios', which commenced "'The Australian Prudential Regulation Authority (APRA) has today announced an increase in the amount of capital required for Australian residential mortgage exposures by authorised deposit-taking institutions (ADIs) accredited to use the internal ratings-based (IRB) approach to credit risk. This change will mean that, for ADIs accredited to use the IRB approach, the average risk weight on Australian residential mortgage exposures will increase from approximately 16 per cent to at least 25 per cent. The increase in IRB mortgage risk weights addresses a recommendation of the Financial System Inquiry (FSI) that APRA ‘raise the average IRB mortgage risk weight to narrow the difference between average mortgage risk weights for ADIs using IRB risk weight models and those using standardised risk weights’. The increase is also consistent with the direction of work being undertaken by the Basel Committee on Banking Supervision (Basel Committee) on changes to the global capital adequacy framework for banks. "Brokers may not have cared about the broader macro economic view that regulators & the Government were concerned about in regard to self regulated mortgage book risk assessment, because they were just going about their normal daily activities & writing business. However this is a classic case where all stakeholders have a responsibility to keep informed because lower end margins, particularly for the major banks, brought about by these changes were going to mean increased interest rates passed through to the consumers. We all needed to know why & how to react accordingly. Now back to your article. I particularly liked the information in regard to the NZ model & the structure of that ''Code Committee'' - We really need to have something like that in place here in Oz . Looking forward to this at some future date. Finally 'Education is the Key to Enlightenment' - Once again well put together article!!
To have a communication breakdown, you first need to have communication. Communication between ASIC and grassroots brokers has never occurred. At best they deal with Aggregators, compliance and industry bodies. Never have they sought the pulse of the broker. Have you ever seen ASIC sit on a panel of a forum for Q&A; or attend PD days holding a stand. The extent of their communication with brokers has been through press releases, when they parade a conviction around like it's a prize. They ignore the bigger issues and go for the low hanging fruits; the easy targets.I have to disagree with the FBAA on this one; but perhaps Peter's experience as President of the FBAA, is different to mine in the real world.
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