The Law Handbook 2024

Chapter 5.8: Mortgages, consumer leases and other finance products 451 consumer could obtain personally, particularly in the context of home loans. However, consumers must be mindful that many brokers will only deal with a panel of lenders who have agreed to pay the broker a commission. Brokers will often only arrange loans with a limited number of lenders, and will not consider all the loans available. There is a risk that a broker acting under these arrangements will arrange a loan that is most advantageous for the broker, rather than a loan that is in the best interests of the consumer. Some brokers also charge large up-front fees to arrange a loan. Consumers need to factor these risks and costs into their decisions and shop around for the best deal. The NCCP Act includes finance broking within its definition of ‘credit assistance’ (s 8 NCCP Act). Like all persons providing credit assistance, finance brokers are required to hold an Australian Credit Licence, a condition of which is that the licensee must be a member of an ASIC-approved dispute resolution scheme ( see ‘Solving disputes with creditors’ in Chapter 5.10: Unauthorised transactions and ePayments Code). Unfair and dishonest conduct Under section 180Aof theNCCPAct, courts have the power to make orders remedying unfair or dishonest conduct by a credit service provider (including a finance broker) where the assistance was provided on or after 1 March 2013. Subsections 180A(3) and (4) set out a broad list of relevant considerations that the court may take into account in determining whether to make such an order, including whether or not the applicant is a member of a disadvantaged class of people (s 180A(4)(b)). Otherwise, the ASIC Act sets out general prohibitions (similar to those in the Australian Consumer Law) against unfair practices such as false representations, misleading or deceptive conduct (ss 12DA–DC, 12DF) and unconscionable conduct (ss 12CA–12CC) in relation to the provision of financial services. The Corporations Act 2001 (Cth) also contains relevant prohibitions in sections 1041E–H, including prohibition against ‘dishonest conduct’ in the provision of financial goods and services (s 1041G). Under section 1041I, a person who suffers loss as a result of contraventions of sections 1041E–H has a cause of action under that provision to recover that loss from the contravener. Credit guide Until 2 October 2011, licensees were exempted from providing a credit guide, quote and credit proposal, provided certain conditions were met (reg 28L NCCP Regulations). Since 2 October 2011, before providing credit assistance, finance brokers have to give consumers a credit guide (s 113 NCCP Act). This guide must disclose: • the broker’s name and contact details; • the broker’s Australian Credit Licence number; • any fees, charges and commissions payable and the manner of their calculation; • the names of the six credit providers with whom the broker conducts the most business; • a broker’s obligation to give a consumer a copy of a preliminary assessment of whether or not the credit sought is unsuitable for the consumer; • a broker’s obligation not to suggest entering, or assist a consumer to enter, or increase the credit limit under, an unsuitable credit contract; • the broker’s internal dispute resolution procedure; • the details of the dispute resolution scheme of which the broker is a member. Quote A broker also has to provide a customer with a detailed, personalised quote before recommending entry into any loan, disclosing the maximum amount of fees payable, a breakdown of those fees and whether or not the fees are payable if a credit contract is not ultimately entered into (s 114 NCCP Act). Credit proposal Under section 121 of the NCCP Act, a finance broker must provide a credit proposal to a consumer when they suggest that: • the consumer apply, or they assist the consumer to apply, for a particular credit contract; • the consumer apply, or they assist the consumer to apply, for an increase to the credit limit of a particular credit contract; or • the consumer remain in a particular credit contract. The credit proposal must disclose: • all fees and charges paid to the broker and the method of their calculation; • a reasonable estimate of all commissions paid to the broker in relation to the credit contract;