National Finance Broking Scheme consultation package released

The Ministerial Council on Consumer Affairs (MCCA) has released a package (pdf) (including an exposure draft Bill) proposing finance broking legislation which is consistent nationally, and which extends to protections for small business clients.

All types of broking structures will be regulated: mortgage brokers, finance brokers, single line broking and single mobile operators, as well as aggregators and franchised organisations. While brokers of credit for small businesses are covered by the framework of the regulatory scheme, there will be differences in the requirements for disclosure and the contractual relationship, to take into account differences in the way brokers and businesses transact.

It will include all credit unless the applicant is a business entity which:
· Employs more than 100 people if it is a manufacturing business; or otherwise, 20 people; or
· The credit sought is more than $2 million

The definition of broker is similar to that in the Consumer Credit Administration Act 1995 (NSW), and will include those intermediaries who are suppliers of goods and services and who negotiate or obtain credit for purchasing those goods and services.

Brokers will be required to have professional indemnity insurance with coverage set out in the regulations. Applicants for licenses will be required to have attained prescribed educational standards.

The closing date for submissions is 15 February 2008.