Financial Sector Reform (Hayne Royal Commission Response - Protecting Consumers (2019 Measures)) Act 2020 (2 of 2020)
Schedule 3 Mortgage brokers
Part 1 Main amendments
National Consumer Credit Protection Act 2009
5 After Part 3-5
Insert:
Part 3-5A - Mortgage brokers and mortgage intermediaries
Division 1 - Introduction
Subdivision A - Guide to this Part
158K Guide to this Part
This Part imposes obligations on mortgage brokers and mortgage intermediaries.
Mortgage brokers must act in the best interests of consumers when providing credit assistance in relation to credit contracts.
Where there is a conflict of interest, mortgage brokers must give priority to consumers in providing credit assistance in relation to credit contracts.
Mortgage brokers and mortgage intermediaries must not accept conflicted remuneration.
Employers, credit providers and mortgage intermediaries must not give conflicted remuneration to mortgage brokers or mortgage intermediaries.
The circumstances in which these bans on conflicted remuneration apply are to be set out in the regulations.
Subdivision B - Interpretation
158KA Doing acts
A reference in this Part to doing an act or thing includes a reference to causing or authorising the act or thing to be done.
158KB Circumstances in which a secondary representative is taken to be acting within actual or apparent authority
(1) This section applies if a person (the secondary representative ) is authorised as a credit representative of a licensee by a credit representative that is a body corporate (the primary representative ).
(2) For the purposes of this Part, the secondary representative is taken to be acting within the scope of the secondary representative's actual or apparent authority from the licensee if the secondary representative is acting within the actual or apparent scope of the authority given by the primary representative to engage in specified credit activities on behalf of the licensee.
158KC Obligations under this Part in addition to other obligations
The obligations imposed on a person under this Part are in addition to any other obligations to which the person is subject under this Act or any other law.
Division 2 - Best interests obligations
Subdivision A - Licensees that provide credit assistance in relation to credit contracts
158L Application of this Subdivision
(1) This Subdivision applies in relation to credit assistance provided by a licensee to a consumer in relation to a credit contract if the licensee is a mortgage broker.
(2) However, this Subdivision does not apply in relation to credit assistance provided to a consumer in relation to a credit contract by a credit representative acting within the scope of the credit representative's actual or apparent authority from the licensee.
Note 1: A credit representative in these circumstances is covered by Subdivision B of this Division.
Note 2: The conduct of any other representative, acting within the scope of actual or apparent authority from the licensee, is taken to have been engaged in also by the licensee: see sections 324 and 325.
158LA Licensee must act in the best interests of the consumer
The licensee must act in the best interests of the consumer in relation to the credit assistance.
Civil penalty: 5,000 penalty units.
158LB Conflict between consumer's interests and those of the licensee etc.
If the licensee knows, or reasonably ought to know, that there is a conflict between the interests of the consumer and the interests of:
(a) the licensee; or
(b) an associate of the licensee; or
(c) a representative of the licensee; or
(d) an associate of a representative of the licensee;
the licensee must give priority to the consumer's interests when providing the credit assistance.
Civil penalty: 5,000 penalty units.
Subdivision B - Credit representatives that provide credit assistance in relation to credit contracts
158LD Application of this Subdivision
This Subdivision applies in relation to credit assistance provided to a consumer in relation to a credit contract by a credit representative acting within the scope of the credit representative's actual or apparent authority from a licensee, if either the credit representative or the licensee is a mortgage broker.
158LE Credit representative must act in the best interests of the consumer
(1) The credit representative must act in the best interests of the consumer in relation to the credit assistance.
Civil penalty: 5,000 penalty units.
(2) The licensee must take reasonable steps to ensure that the credit representative complies with subsection (1).
Civil penalty: 5,000 penalty units.
158LF Conflict between consumer's interests and those of the credit representative etc.
(1) If the credit representative knows, or reasonably ought to know, that there is a conflict between the interests of the consumer and the interests of:
(a) the licensee; or
(b) an associate of the licensee; or
(c) the credit representative; or
(d) an associate of the credit representative; or
(e) another representative of the licensee; or
(f) an associate of another representative of the licensee;
the credit representative must give priority to the consumer's interests when providing the credit assistance.
Civil penalty: 5,000 penalty units.
(2) The licensee must take reasonable steps to ensure that the credit representative complies with subsection (1).
Civil penalty: 5,000 penalty units.
Division 4 - Conflicted remuneration
Subdivision A - What is conflicted remuneration?
158N Conflicted remuneration
Conflicted remuneration means:
(a) any benefit, whether monetary or non-monetary, that:
(i) is given to a licensee, or a representative of a licensee, who provides credit assistance to consumers; and
(ii) because of the nature of the benefit or the circumstances in which it is given, could reasonably be expected to influence the credit assistance provided to consumers; or
(b) any benefit, whether monetary or non-monetary, that:
(i) is given to a licensee, or a representative of a licensee, who acts as an intermediary; and
(ii) because of the nature of the benefit or the circumstances in which it is given, could reasonably be expected to influence whether the licensee or representative acts as an intermediary, or how the licensee or representative acts as an intermediary.
158NA Regulations may further define conflicted remuneration
The regulations may prescribe:
(a) circumstances, in addition to those set out in section 158N, in which a benefit given to a licensee or a representative of a licensee is conflicted remuneration ; and
(b) circumstances in which a benefit given to a licensee or a representative of a licensee is not conflicted remuneration .
Subdivision B - Ban on accepting conflicted remuneration
158NB Licensee must not accept conflicted remuneration
A licensee must not accept conflicted remuneration in circumstances prescribed by the regulations if:
(a) the licensee is a mortgage broker; or
(b) the licensee is a mortgage intermediary.
Civil penalty: 5,000 penalty units.
158NC Credit representative must not accept conflicted remuneration
(1) A credit representative of a licensee must not accept conflicted remuneration in circumstances prescribed by the regulations if the credit representative or the licensee is:
(a) a mortgage broker; or
(b) a mortgage intermediary.
Civil penalty: 5,000 penalty units.
(2) The licensee must take reasonable steps to ensure that the credit representative complies with subsection (1).
Civil penalty: 5,000 penalty units.
Subdivision C - Ban on giving conflicted remuneration
158ND Employer must not give employees conflicted remuneration
(1) An employer of a licensee must not give the licensee conflicted remuneration in circumstances prescribed by the regulations if the licensee is:
(a) a mortgage broker; or
(b) a mortgage intermediary.
Civil penalty: 5,000 penalty units.
(2) An employer of a representative of a licensee must not give the representative conflicted remuneration in circumstances prescribed by the regulations if the licensee or the representative is:
(a) a mortgage broker; or
(b) a mortgage intermediary.
Civil penalty: 5,000 penalty units.
158NE Credit provider must not give conflicted remuneration
(1) A credit provider must not give a licensee conflicted remuneration in circumstances prescribed by the regulations if the licensee is:
(a) a mortgage broker; or
(b) a mortgage intermediary.
Civil penalty: 5,000 penalty units.
(2) A credit provider must not give a representative of a licensee conflicted remuneration in circumstances prescribed by the regulations if the licensee or the representative is:
(a) a mortgage broker; or
(b) a mortgage intermediary.
Civil penalty: 5,000 penalty units.
158NF Mortgage intermediary must not give conflicted remuneration
(1) A mortgage intermediary must not give a licensee conflicted remuneration in circumstances prescribed by the regulations if the licensee is:
(a) a mortgage broker; or
(b) a mortgage intermediary.
Civil penalty: 5,000 penalty units.
(2) A mortgage intermediary must not give a representative of a licensee conflicted remuneration in circumstances prescribed by the regulations if the licensee or the representative is:
(a) a mortgage broker; or
(b) a mortgage intermediary.
Civil penalty: 5,000 penalty units.
Division 6 - Miscellaneous
158T Anti-avoidance
A person must not, either alone or together with one or more other persons, enter into, begin to carry out or carry out a scheme if:
(a) it would be concluded that the person, or any of the persons, who entered into, began to carry out or carried out the scheme or any part of the scheme did so for the sole purpose or for a purpose (that is not incidental) of avoiding the application of any provision of this Part in relation to any person or persons (whether or not a person or persons who entered into, began to carry out or carried out the scheme or any part of the scheme); and
(b) the scheme or the part of the scheme has achieved, or apart from this section, would achieve, that purpose.
Civil penalty: 5,000 penalty units.