Opinion: How brokers can stay compliant in 2017

Many conversations that the QED team has with brokers hinge on ‘what’s coming’, particularly from ASIC but, increasingly so, from lenders.

The law hasn’t changed for some time now, so there are no new obligations as such. It’s more a case of ASIC becoming more aware of what’s going on in the industry and brokers becoming more aware of what all these obligations actually mean to them.

ASIC has introduced a couple of new topics over recent years. These opinions mostly surface through ASIC’s reports and, most often, these reports are particularly focused on one channel of the industry. Many brokers therefore dismiss them off hand as only applying to that specifi c channel. This is a big mistake as the opinions expressed on one topic will surely be more universal.

Topics to which ASIC has drawn attention recently include borrowers’ requirements and objectives, interest-only loans and debt consolidation. However, towards the end of 2016, QED heard ASIC talking about what we think is their next major focus – a licensee’s ‘general conduct obligations’. What these are is the topic of a whole other article, but for now it is sufficient to say that they relate to “everything other than responsible lending”. It can be summed up even better by the question: “What is the licensee’s compliance program?”

What makes this very interesting is that all of the large aggregators and banks are starting to ask the same question.

Aggregators have been all over their credit reps for ages, but banks are now starting to ask aggregators, “What are you doing about your licensees? How do you know about their state of compliance?”

For those readers that missed it or perhaps thought compliance means reviewing your credit files once every so often, this is what compliance means:
  • Understanding what all your business obligations are, not just NCCP
  • Having written documents – policies – that explain what your business does to meet these obligations
  • Identification of the controls you have in your business that ensure the policies are being followed
  • Regular testing of the controls to ensure they are still working
  • Documentation of the testing to demonstrate that it was done and what the results were
  • Planning of the corrective actions that are going to fix the things you found were ‘broken’ and therefore get you back to full compliance again.
This is not new. Having a compliance program has been part of s47 of the Credit Act since day one. The expectation is that you will at least broadly follow this thing called ISO19600. ISO19600 is an international standard that evolved from the Australian AS3806 – there you go, we Aussies invented the standard and gave it to the rest of the world.

If you are not doing everything in the above six steps in your licensee business, no matter how big or small, you are breaking the law. So, what can you do about this? You can do it yourself but you may miss things and, well, you might just not be bothered. You can engage an established consultancy firm that will do a great job – but think five figure costs.

I believe QED’s CompliFast solution is the only product that covers all the bases in a package that is affordable for the majority of mortgage brokers; $50-odd per month (depending on who you aggregate through) will provide you with a report that tells you exactly what your overall compliance status is.

To the authorities, ignorance about compliance is no excuse. Every year when you fill out your Annual Compliance Certificate you declare that you have “adequate arrangements and systems in place to ensure your compliance with the credit legislation”. If you haven’t followed the steps mentioned above, you have lied to ASIC and again broken the law. You didn’t do it on purpose, but now you know.


Greg Ashe is the director of QED Risk Services, having website www.complifast.com.au. started the business in 2009 to help brokers deal with new regulatory requirements. He has a background with Citigroup and has worked for the regulator APRA. You can contact Greg about any of the issues raised in this article on 1300 817 662 or through the website www.complifast.com.au.



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