23 June 2008: Given that current regulation for credit advice remains inconsistent and inadequate in key areas, Professional services firm Deloitte has welcomed Senator Nick Sherry’s Green Paper on Financial Services and Credit Reform proposing a single-standard, national financial services regulation for most financial products in the country.

Deloitte banking and finance specialist Phil Hardy said, “The industry believes that a holistic approach recognising the needs of consumers for investment and credit product advice is critical, firstly to ensure consistent consumer safeguards, and secondly to promote a competitive and vibrant financial services industry.

“Costs will be simplified for some financial institutions already providing investment advice under the existing licensing regime. And the proposals will ensure better players come out stronger with fringe element brokers curbed.”

“The paper is a convergence of the recommendations from industry bodies, lenders, the Productivity Commission, consumer groups, financial planners and mortgage broking groups over recent years,” he said.

He pointed out that the Green Paper identifies the lack of nationally prescribed qualification and advice standards for mortgage brokers, some non-bank mortgage lenders and other credit product originators.

“This is in stark contrast to the national compliance regime requirement for investment products, their providers and the financial planners giving the investment advice,” he said.

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However, Hardy and other banking and finance specialists are concerned that the current proposal will bring only mortgages under a national banner.

“If you split the regulations between mortgages and non-mortgage loans some players will face compliance obligations across a possible nine different jurisdictions. This would of course lead to increased costs,” said Hardy.

Philip Hardy
Financial Services
Deloitte
Tel: +61 (0) 2 9322 7294