The Australian Securities and Investments Commission (ASIC) has asked for feedback from brokers on current regulation around mortgage offset accounts due to expire later on this year.
Specifically, ASIC has proposed changes around class order [CO 03/1048] of the Corporations Act 2001 dealing with offset accounts that is due to sunset on 1 October.
This order permits the provision of financial product advice on a mortgage offset account and the arrangement for another person to apply for, acquire, vary or dispose of a mortgage offset account without the need to hold an Australian Financial Services (AFS) licence. Instead, ASIC requires entities such as brokers to be members of an approved external dispute resolution (EDR) scheme.
“Persons who advise or deal in relation to mortgage offset accounts do not need to obtain an AFS licence solely for these purposes,” the regulator said.
ASIC proposes to continue these terms beyond the original sunset date, instead making some minor tweaks to the current legislation.
The most significant change will be removal of compulsory EDR membership. This has become redundant with the introduction of the National Consumer Credit Protection Act 2009 (NCCP) which states that credit licensees and credit representatives be members of an approved EDR scheme anyway.
Other amendments include updating the legislation’s name, updating the format of the current document, adding greater clarity through simplified drafting, updating some references and definitions, and correcting any errors.
“We have reached the preliminary view that [CO 03/1048] is operating effectively and efficiently, and continues to form a useful part of the legislative framework,” ASIC said.
Brokers are invited to give feedback on whether the class order around mortgage offset accounts is operating efficiently and effectively.
Submissions can be sent to Gerard Andrews, a lawyer in the deposit takers, credit and insurers division at ASIC.
The closing date for submissions is 6 July with the new class orders coming into effect on 1 October.
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