Mortgage originators seek AFSL
Mid-size mortgage broking firm, Lawfund, is close to taking equity in a Sydney-based dealer group, with director Sal Correro confirming negotiations are well-advanced.
Correro says the move is based on a belief that mortgage broking groups will need to become substantially more compliant under the Financial Services Reform Act (FSRA), with their situation compounded by a tightening of state laws relating to mortgage brokers and finance providers.
Lawfund was established about eight years ago to service the client financing needs of solicitors but has since moved beyond the legal profession.
The deal follows comments from the Mortgage Industry Association of Australia (MIAA) that mortgage originators wanting to provide advice on consumer credit insurance, other insurance products or deposit products must be an authorised representative of an Australian Financial Services Licence (AFSL) holder or hold their own AFSL.
The legal commentary, provided by Gadens Lawyers, suggests all large mortgage aggregators and originators should obtain an AFSL if they want to sell associated products.
MIAA chief executive Phil Naylor says mortgage brokers wanting to expand beyond broking mortgages will need to ensure compliance under the FSRA.
He says the possibility exists that the sector will develop two separate streams — companies dedicated to broking mortgages and those offering a broader range of services.
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