Cleaning up the lender’s code

Phil Naylor

The Mortgage and Finance Association of Australia (MFAA) is tightening up its Code of Practice in an effort to rid the mortgage industry of predatory lenders.

The amendments, which are being introduced to protect consumers, now require the MFAA’s 13,000 members to restrict their business to credit providers that are members of an external dispute resolution (EDR) scheme approved by the Australian Securities and InvestmentsCommission (ASIC).

MFAA boss Phil Naylor said the industry body is determined to stamp out unscrupulous operators, which are bad for industry and consumers.

“For months MFAA has been lobbying governments to make it compulsory for all credit providers to be members of an ASIC-approved EDR scheme. This would make it much harder for lenders to prey on the vulnerable and make the penalties for predatory practices tougher,” he said.

The MFAA will be cracking down on brokers and lenders who recommend loans inappropriate for a borrower’s needs, which is already a breach of the code, according to Naylor.

“While we wait for new legislation measures to be introduced, the MFAA has amended our code of practice to make sure consumers are protected as best they can be,” Naylor said.