Home loan providers and brokers must be a holder of an appropriate credit license to be operating in Australia. If a home loan provider is not a credit license holder, and they are not exempt from needing to hold a credit license, then they are carrying out illegal practices and they can be prosecuted under Australian laws.
Why Should a Home Loan Provider Have a Credit License?
A new policy came into place on July the 1st 2010. This policy states that home loan providers operating in Australia must be registered with the Australian Securities and Investments Commission (ASIC). Or alternatively, these home loan providers must be representatives of a company or person who is the holder of a credit license.
This new policy came into place to protect borrowers from unorthodox home loan lending practices. This ensures that appropriate protocols are followed when offering home loans as credit licenses are only issued to persons who have completed appropriate training and who have passed testing to become approved. Therefore, all home loan providers that hold a credit license must offer fair and reasonable credit services that adhere to the policies of the National Credit Protection Act 2009 (National Credit Act).
How Does this Help Me as a Home Loan Holder?
By dealing only with a licensed home loan provider you are ensured that they are operating within the boundaries of the National Credit Act, which states that a home loan provider must do the following:
1. Ask about your financial background – Your home loan provider must ask about your financial situation, background and requirements, as well as your objectives, before they can offer you a home loan.
2. Verify your financial information – A home loan provider must take reasonable steps to verify all financial information that you provide them with. This means viewing pay slips, taxation assessments and other evidence that proves your current financial status.
3. Assess the suitability of a home loan – A home loan provider must decide if the credit contract you are applying for is suitable for you and your financial circumstances based on all of the information you have supplied to them. If the credit provider feels that a product is not suitable, then they need search until a suitable alternative is found.
How Do I Check to See If a Home Loan Provider is Registered?
To find out if a home loan provider is registered, please visit Asic’s Connect. This lists professional’s who are currently registered. To use this service, type in the name of the professional, the name of the company, or the license or registration number of your home loan provider. Then type in their type of registration and status. Then click search. If you find this service difficult to use or you prefer to talk to someone in person, then phone ASIC direct on 1300 300 630 to verify a home loan provider’s registration.
Do you want to know more about home loan providers and credit licenses? If you said YES, then contact eChoice and find out more today
Written by eChoice