Australia: Proposed disclosure regulation amendments
Regulation and compliance update

The MFAA have discussed with Treasury the recently released regulations dealing with credit guides, quotes, and proposal disclosure documents.  As a result of these discussions, the MFAA are very confident that some amendments will be made prior to 1 October 2011 (the start date).  There are also some planned changes for Key Fact Sheets.

Credit guides – identifying panel lenders

Section 113(2)(f) provides that a licensee who provides credit assistance must specify in the credit guide their panel lenders.  If the licensee has more than six panel lenders, the credit guide must state the six lenders with whom the licensee does the most business.  The MFAA argued that showing the six biggest lenders may be uncompetitive (pushing customers towards the six listed lenders), difficult (because the members of this group will change from time to time), misleading (as these lenders may not provide finance suitable for the customer), and may result in the disclosure of commercially sensitive information without a corresponding benefit for consumers. 

Treasury is now seriously considering amending the regulations so that licensees have the option of specifying:

• all panel lenders; or
• the six with whom the licensee does the most business.

The issue also arises in s136(2)(f) and r27A(3) in relation to credit guides in respect of consumer leases.

Mortgage managers – display of maximum cost and interest rate

Regulation 28H(3) provides that mortgage managers need not disclose their commission (margin) if (amongst other things) the maximum cost and the interest rate are published on the credit provider's or lessor's website. 

The MFAA submitted that it would be more useful for consumers if this information is displayed on the mortgage manager's website.  It is anticipated regulations will be amended to provide that the information can be displayed on the mortgage manager's website.

When will these amendments be made?

There are Exco meetings (where regulations are approved) on 14 September and 29 September.  It is likely that these amendments will be progressed at one of these two meetings.

The MFAA is quite confident that industry can proceed on the assumption these amendments will be made.

Key Fact Sheets

The legislation requires only the lender of record (licensee) to provide KFS.  Treasury have indicated that it is appropriate to require mortgage managers to provide KFSs for managed loans rather than the lender of record.  Accordingly, mortgage managers now need to start planning to be able to produce KFSs.  Although, assuming there are changes to this effect, the commencement date still needs to be determined, and may not be 1 January 2012.

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This report does not comprise legal advice and neither Gadens Lawyers nor the authors accept any responsibility for it.