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Green Paper on Financial Services and Credit Reform

Applies to Financial Service and Credit Industry particpants


What's new?

Finally, the government has released it’s much anticipated green paper on proposals for financial services and credit reform in Australia. The purpose of the paper is to consult stakeholders about a range of financial services and credit reform initiatives.

The Government is proposing to license more financial services and nationalise the regulation of some credit related financial services such as mortgage brokers.

Overview of some key proposals

Key changes ASIC have announced include:

  • The Mortgage broking industry is a growing area of the credit sector, and currently only Western Australia has a licensing system for mortgage brokers. The government proposal for reform in this area is to assume responsibility for mortgages as financial products under Chapter 7 of the Corporations Act. If these proposals are implemented mortgage brokers would be licensed by ASIC, have to meet appropriate disclosure requirements in regards to fees and contract terms and meet appropriate requirements regarding financial product advice.
  • Trustee corporations are currently subject to State and Territory based regulatory regimes, with inconsistent and duplicated licensing and reporting systems. The government has proposed two options for regulation of this sector. Option one is to amend the Corporations Act to provide for licensing and supervision by ASIC, option two would be to implement legislation to provide licensing and supervision by APRA.
  • In the area of margin lending the government has made three proposals; to maintain the status quo; include margin lending as a financial product under Chapter 7 of the Corporations Act; or develop a new Commonwealth regulatory regime.
  • Debentures, in the light of failed property development companies such as Westpoint, Fincorp and ACR, the Government aims to improve the area for retail customers. A number of proposals have been made, including the harmonisation of regulation of promissory notes; extending licensing requirements for issuers of debentures; licensing of trustee companies; and reviewing the duties of trustees.
  • In the area of Personal loans/spruikers/credit cards the government has not made proposals at this stage, but is seeking input from stakeholders

What does this mean for you?

At the moment all of this is just at proposal stage, though if implemented you may face additional licensing requirements. You have until 1 July 2008 if you wish to comment on any of the proposals. Contact details are as follows:

Email: financialservicesgreenpaper@treasury.gov.au

OR mail to:

Financial Services and Credit Reform Green Paper
Corporations and Financial Services Division
Treasury
Langton Crescent
PARKES ACT 2600

Further information

Certainty Compliance can assist you with any of your compliance obligations. Please contact your Certainty consultant at (02) 9238 8091 or enquiries@certaintycompliance.com.au

Green Paper on Financial Services and Credit Reform: www.treasury.gov.au/greenpaper