Code of conduct for finance brokers in Queensland

By Randal Dennings and Graeme Howatson.

Key Points:
The proposed Queensland code introduces new safeguards for borrowers seeking loans through finance brokers.

The Queensland Government is proposing to implement an enforceable code of conduct which would require finance brokers to meet certain conduct standards in their dealings with clients.

The Government has indicated that the Fair Trading (Code of Practice - Finance Brokers) Regulation 2007 will be an interim measure until national regulation is enacted in 2009. The code is to set minimum behavioural standards for finance brokers consistent with those proposed nationally.

The proposed Queensland code will:

• contain disclosure and statement of reasons provisions, requiring brokers to provide specified disclosures about costs and services before negotiating a broking agreement with the client. The disclosures must contain details of the client's credit needs and the statement of reasons must explain why the products recommended satisfy those credit needs
• prevent brokers from demanding, receiving or accepting any commission from a client or potential client before securing their credit needs
• prevent brokers from lodging a caveat over real property to secure a fee, commission or any other amount that is payable
• include general behaviour provisions requiring finance brokers to act within the Fair Trading Act
• require brokers to comply with all Queensland laws relating to confidentiality and privacy; and
• require brokers to establish and maintain an internal dispute resolution process and inform borrowers and potential borrowers of its existence.

In relation to the legislation for the national regulation of finance brokers, it has been announced that a consultation Bill will be released later this year.

In Western Australia, the Department of Consumer and Employment Protection has released a revised code of conduct for finance brokers which commenced on 29 June 2007. Like the proposed Queensland code, the revised WA code introduces new safeguards for borrowers seeking loans through finance brokers.

For further information, please contact Randal Dennings.