Good file notes vital, says MFAA
Without doubt it’s been a busy year for mortgage brokers with even more demands placed on them to ensure they are compliant in their dealings with their clients and regulatory bodies.
This month’s MFAA webinar, Keeping Compliant in 2024 – Top Tips and Key Themes, proved particularly popular with members.
More than 1,500 registered to take part in the online session conducted by Elise Ivory, a partner at law firm Dentons (pictured above left), who handles regulation and compliance issues, and Naveen Ahluwalia, MFAA executive of policy and legal (pictured above right).
The webinar, part of the MFAA's continuing professional development program, covered a number of key areas including best interests duty (BID), the conflict priority rule and conflicted remuneration.
MFAA reminds brokers to act in clients’ best interests
As part of the webinar it was underlined that brokers must act in the best interests of their clients, must prioritise their customers’ interest when providing credit assistance and that they cannot receive commission that is conflicted remuneration.
Brokers were also told that entering into or carrying out any activity designed to avoid the application of BID, conflict property rule or conflicted remuneration, is banned (anti-avoidance).
Ivory and Ahluwalia covered the fact that complying with BID continues to be a linchpin for mortgage brokers, ensuring not only compliance but also fostering a client-centric approach that stands up in an ever-changing market and under regulatory scrutiny.
Broker members were reminded that good record keeping, and privacy were key particularly as the mortgage and finance broking industry faced proposed changes to the privacy laws.
The new laws mean more stringent privacy obligations on small businesses, and brokers need to ensure good privacy practices.
Attendees of the webinar were also told that the federal government’s cybersecurity strategy focuses on making sure businesses prioritised cybersecurity risks with an increased focus on mitigating the risk of scam activity.
Ivory said it was impossible to underestimate the importance of good record keeping and transparency when it came to communicating with clients.
“It is so important to keep file notes, a record of all conversations … if you don’t have the proof, it means nothing,” Ivory said.
Third party due diligence was another major theme of the webinar with brokers reminded that while referrers are an important source of leads for brokers, it is vital to ensure that third-party relationships are based on trust and thorough due diligence.
MFAA: Brokers face ‘unprecedented’ times
Ahluwalia said the webinar had come at a time when brokers and their clients had faced “unprecedented” times where there had been 13 rate rises in 15 months and by the end of 2023 an estimated 880,000 borrowers would have rolled off fixed rates.
She said with rates of mortgage prisoners on the rise, customers were worried more than ever about making their payments.
“Our members are reporting more and more borrowers are reaching out to them for the very first time to help them with their mortgages,” Ahluwalia said.
She said the MFAA expected more borrowers to be leaning on their brokers for help, particularly at a time when 71.5% of mortgages were facilitated by brokers and that number was expected to increase next year.
MFAA figures released earlier this year showed broker market share has increased year-on-year and in September quarter had risen 71.5% of all new residential home loans.
Meanwhile, alarming new research from Roy Morgan released in October shows a record number of mortgage holders are at risk of mortgage stress.
Attendees at the webinar were also told that ASIC and AFCA had revealed a number of their current priorities, and these included: breach reporting, misconduct relating to the use of car financing, compliance with financial hardship obligations, vulnerable customers, misleading and deceptive conduct and record keeping.
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