QUEENSLAND CRACKS DOWN ON UNSCRUPULOUS FINANCE BROKERS

The Beattie Government is cracking down on finance brokers with a new code of conduct to protect Queensland borrowers.

Fair Trading Minister Margaret Keech said a new enforceable Code of Conduct would require brokers to meet new conduct standards in their dealings with clients.

“It’s estimated that around 50 per cent of home loans are negotiated by brokers on behalf of Queenslanders,” Mrs Keech said.

“It’s big business, yet there is no regulation.

“The vast majority of brokers operate ethically. However, as in most industries, the minority of less scrupulous brokers pose problems.

“People are at risk of receiving biased advice where brokers are paid by lenders and of financial loss when the broker’s fees are paid but they are unable to get credit.

“Some unethical brokers may even try to persuade people to borrow more money to drive up their commissions.”

Mrs Keech said the Government was moving now to protect Queenslanders because national regulation was more than two years away.

“The national scheme is not likely to be in place before 2009 and that’s not good enough for Queenslanders who have been waiting years for us to protect them,” she said.

“The Office of Fair Trading receives at least 50 complaints each year about unscrupulous finance brokers, but anecdotal evidence suggests the problem is far more widespread.

“We remain committed to being part of a national solution but this code will protect people while we wait for the national scheme.”

Mrs Keech said the proposed interim Code of Conduct would be a regulation under the Fair Trading Act 1989.

“The Code will set minimum behavioural standards for Queensland finance brokers consistent with those proposed nationally,” she said.

The Code will:

·Contain disclosure provisions and statement of reasons. This will require brokers to provide specified disclosures about costs and services before negotiating a broking agreement with the client. The disclosures will contain details of the client’s credit needs, as well as a statement of reasons after the credit is sourced explaining why the products recommended satisfy those credit needs.

·Prevent brokers from demanding, receiving or accepting any commission from a client, or potential client, before securing their credit needs.

·Prevent brokers from lodging a caveat over real property to secure a fee, commission or any other amount that is payable;

·Include general behaviour provisions requiring finance brokers to act within the Fair Trading Act 1989.

·Requiring brokers to comply with all Queensland laws relating to confidentiality and privacy.

·Require brokers to establish and maintain an internal dispute resolution process, and inform borrowers and potential borrowers of its existence.

Media Contact: Jo Gibbons 3225 1005 or 0421 611 989