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Regulation of brokers must be strengthened.



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Media Release

SENATOR STEPHEN CONROY ALAN GRIFFIN MP DEPUTY LEADER OF THE OPPOSITION IN THE SENATE SHADOW MINISTER FOR CONSUMER SHADOW MINISTER FOR FINANCIAL SERVICES PROTECTION AND CONSUMER HEALTH

26th March 2003

REGULATION OF BROKERS MUST BE STRENGTHENED

Today’s report to ASIC by the Consumer Credit Legal Centre (NSW) Inc on the finance and mortgage broking industry demonstrates the failure of the regulatory system to keep up with market developments.

The broker industry has grown rapidly and now accounts for $86.6 billion of credit with banks, building societies and credit unions. The downside of this growing business is that complaints about the conduct of brokers are also on the rise.

The report reveals an inconsistent and inadequate framework of Commonwealth, State and Territory legislation and industry self-regulation which leaves consumers exposed.

Some of the problems identified by the report include:

É Conflicts of interest caused by the extensive use of commissions for broker remuneration; É Failure to disclose commissions; É The provision of inappropriate advice; É The absence of low cost alternative dispute resolution mechanisms.

Labor believes that national leadership is required on this issue to ensure that a rigorous, comprehensive and uniform regulatory regime for brokers is established to protect consumers. To further progress these issues Labor will seek to establish a Parliamentary Joint Committee on Corporations and Securities inquiry to examine options for improving the regulation of the broking industry.

For further information please contact: Stephen Conroy: 0418 383 965

Alan Griffin: 0419 353 476