CREDIT INTERMEDIARIES AND

AGENCY

Philip Haultain

Special Counsel

National Australia Bank

Credit Intermediaries and Agency

Purpose

The Nature of Agency - Consent, authority, fiduciary obligation

- Acts binding the principal

- Knowledge imputed to the principal

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Credit intermediaries and agency

The nature of credit intermediaries - Finance brokers

- Mortgage Managers

- Referrers

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Credit intermediaries and agency

Credit intermediaries as agents - NCCP approach

- Finance brokers

* prima facie assumption

* Tonto Home Loans v Tavares

* Permanent Mortgages v Van den Bergh

- Mortgage Managers

* Micarone v. Perpetual Trustees

* Bartle v GE Custodians

* Perpetual Trustees v Schmidt

* Interstar cases

- Referrers

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Credit intermediaries and agency

Duties of agents

- common law

- NCCP general conduct obligations

Remuneration - common law

- section 114 NCCP

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Credit intermediaries and agency

Termination

- common law

- automatic termination under NCCP

ACL holder duties

- efficiently, honestly and fairly

Credit monitoring review

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Jon Denovan – Partner, Gadens

Why are referrers potentially regulated?

A business needs to be licensed

(or appointed as a CR) if it is providing a ‘credit

service’

A credit service occurs if a person as part of, or

incidentally to, a business either:

Provides credit assistance

Acts as an intermediary

Main categories of referrers

Non-business related referrers

Business related referrers who do not provide

customer contact details to lenders / brokers

Business related referrers who do provide

customer contact details to lenders / brokers

Website referrers

Licensed intermediaries

Importance of business origination

A key customer touch point

Subsequent ‘information repair’ may be

insufficient to negate original perceptions

Marketing material

Content becomes critical

Example – what is a ‘standard variable rate

loan’?

Is the rate advertised available to all borrowers?

Is the rate a ‘teaser’ rate?

Comparison sites – comparing like with like?

Internet as source of business

Categorisation of site often hard

Advertisement v referral

Click through

If a referral – hard to argue incidental to a

business when the service is advertised

Is there a suggestion of a specific contract with a

specific lender?

Intermediaries

• Unlicensed and licensed

• Does the second credit assessment serve any regulatory purpose?

Intermediaries

Aggregators – the personal touch

Aggregators

Liability to lenders

Liability to borrowers

Data retention