As you may be aware, the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was published on Monday 4th February.
While the report makes a total of 76 recommendations across banking & financial services industry, we’re happy that there is no finding of market failure in the commercial broker channel. Brokers welcome this news and it’s and reassuring for clients.
It’s also good news in the practical sense, that the Royal Commission has recommended that the National Consumer Credit Protection Act (NCCP Act) should not extend to small business lending and that the Point of Sale Exemption of NCCP should be removed. This means business borrowers should not be subjected to the tighter lending policies and consumer-style credit procedures that have hampered lending in the home loan space, causing a flattening of the property market.
CAFBA (Commercial & Asset Finance Brokers Association of Australia) has strongly advocated for these changes to government and regulators for many years as well as directly to the Royal Commissioner and welcomes the Government’s support of these recommendations. CAFBA will continue to work closely with banks to ensure there isn’t “policy creep”, where banks apply rules in one part of financial services to other areas for the sake of simplicity. The best way to navigate through these issues is to have your commercial broker advocate on your behalf.
So even though banks, residential mortgage brokers, and car loan providers at dealerships will need to adjust to additional regulation, the recommendations have not indicated that securing funding for businesses through your commercial broker will be any harder and borrowing costs are also not likely to be affected.