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The MFAA has urged the current federal government to exclude investment and private lending from proposed reforms to NCCP.
In a submission to Treasury this month, the MFAA stated that it opposed any further regulation of the finance industry until at least 2016, when the impact of the NCCP Act and the Enhancement Act could be fully assessed.
Responding to proposals made by Treasury, the submission suggested that the scope of transactions, which can be considered by an external dispute resolution scheme, should be limited to avoid abuse by people who aren’t really consumers as described in the reform package.
MFAA CEO, Phil Naylor, told Australian Broker there simply hasn’t been enough consideration by the government as to the effects of the proposed regulation.
#pb# “We’re saying it’s better to hang off and see how the current NCCP is working before you propose more regulations. There’s a danger in over-regulating - people just won’t lend.”
Naylor said making ‘private’ loans subject to the National Credit Code will also discourage private lenders from using intermediaries, most of whom are licensed finance brokers.
“This will result in ‘private’ investors being exposed to greater risk of loss, and encourage the market to operate outside the law. We believe a better regime should require intermediaries who arrange private loans must be a licensed credit representative and subject to external dispute resolution.”
The MFAA’s submission also opposed the planned regulation of investment lending because the wide scope of this move would have a range of negative and unforeseen consequences.
“Our primary concern is that bringing this type of lending within the ACL (licensing) regime may reduce the availability of finance and reduce competition. This would limit the scope for consumers and businesses to attain the appropriate loan suited to their needs”.
