It may take legislation to ensure high standards in the mortgage broking industry and to eliminate illegal or sub-standard practices, Rob Tucker, the immediate past chairman of the Mortgage Brokers Association warned the recent annual conference.
Financial crimes or fraud in the mortgage industry is increasing and although the industry prefers not to talk about it, "it is a fact and we need to do something about it," Tucker says.
One way mortgage brokers may be affected is through the Financial Transactions Reporting Act which requires all transactions over $10,000 to be reported, aiming to eliminate money laundering.
Brokers are currently screening their customers on behalf of lenders. "If the lenders are going to rely on us to do that for them, it may require some form of licensing," Tucker says.
"I’m not saying it would be better, but it would probably be easier for lenders if there was some sort of licensing or compliance regime in place. Money laundering is starting to take all sorts of funny forms and the mortgage industry is one of them."
Tucker doesn’t personally agree that legislation or licensing is the way to go, but thinks it is likely to happen mortgage brokers should be active in having input.
He notes that in Australia, mortgage broking is the fasting growing distribution channel for home loans and that the major banks are winding down their direct sales channels. "But along with this comes the call for regulation of mortgage brokers," he says. Australia does have a licensing regime in Western Australia and the Australian Capital Territory, but not elsewhere.
In New Zealand, brokers currently account for between 25% and 30% of mortgages written.
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