Mortgage broker reform passes parliament | Newcastle Herald

Mortgage broker reform passes parliament | Newcastle Herald

February 6, 2020 Off By administrator

news, national

Mortgage brokers will be forced to act in consumers’ best interests or face stronger penalties under the latest response to the banking royal commission. Legislation to put four more of commissioner Kenneth Hayne’s recommendations into place cleared federal parliament on Thursday. Under the new measures, funeral expenses-only insurance policies will get consumer protection. The unfair contracts regime will be extended to include insurance in a move designed to stop insurers using unfair terms to deny or underpay claims. Consumer advocates welcomed the passage of the bill, with Choice chief executive Alan Kirkland hailing it as an important day for borrowers. “People will now be able to expect that mortgage brokers are acting in their best interests, and if brokers don’t comply, they will face penalties,” he said. Mr Kirkland said the broking industry had for too long depended on recommending mortgages that provided the best commissions rather than best deal for customers. “This has led to brokers selling people into loans that are riskier, take longer to repay, and are more likely to fall into arrears,” he said. Consumer Action chief Gerard Brody said closing the loophole around funeral insurance would help stop rip-offs. “Funeral expenses policies have been sold for too long without proper safeguards, which has resulted in serious harm in Victorian Aboriginal communities,” he said. Financial Rights chief executive Karen Cox called on the federal government to extend the protections to people already holding funeral expense policies with unlicensed providers. Meanwhile, Australia’s big four banks will be hauled before federal politicians to examine how they are progressing with their response to the royal commission. Economics committee chair and Liberal MP Tim Wilson said the hearings are an important mechanism for the parliament to publicly hold the major banks to account. He said recent revelations about Westpac’s shocking compliance failings in its transaction reporting system have again shaken the community’s trust in financial institutions. “(Holding banks accountable) will help to ensure Australia’s financial sector implements the critical reforms needed to regain the community’s trust,” Mr Wilson said in a statement on Thursday. Westpac and the National Australia Bank will separately face the committee on June 12 and the Commonwealth Bank and ANZ will be scrutinised on June 26. Australian Associated Press

https://nnimgt-a.akamaihd.net/transform/v1/crop/frm/silverstone-feed-data/56252020-2ccb-4444-98eb-2c5b3194e660.jpg/r0_74_800_526_w1200_h678_fmax.jpg

(Excerpt) To read the full article , click here
Image credit: source