Information for borrowers

Make sure you fully understand the loan documents and, if in doubt, seek the services of a friend or independent person.

The loan should suit you personal needs now and in the future e.g. check early payment fees.

Make sure you look at all of the costs of the loan. Some loans may offer lower interest rates but higher fees. Ask for a comparison rate schedule which combines the interest charges together with a number of the fees and charges to enable consumers to compare, as far as practical, the true cost of the loans offered by a number of different lenders.

Remember that you will need to pay stamp duty and other statutory charges. Avoid including these in your loan if they are payable prior to the advance of the loan.
If you have a complaint against a finance broker you are encouraged to contact the Department of Consumer and Employment Protection. If the broker belongs to an industry body which has a complaints resolution service you may also wish to contact that body.

Frequently asked questions - for consumers

How can I find out if my finance broker is licensed?
Restricted licences – what does this mean?
What can Consumer Protection do for me?
What questions should I ask my finance broker?

1. How can I find out if my finance broker is licensed?

Consumer Protection regularly publishes updates for the registry of licensed finance brokers. Alternatively, you can ring the Licensing Line on (08) 9282 0835 to purchase a copy of the register.

2. Restricted licences – what does this mean?

By far, the majority of licensed finance brokers have a ‘restricted’ (‘B’ or ‘C’ class) licence. This means the broker can only negotiate or arrange loans with lenders who are either:

Regulated under Chapter 5C or 7 of the Corporations Act or by the Australian Prudential Regulation Authority (APRA);
A licensed credit provider under the Credit (Administration) Act 1984;
Exempt from holding a credit providers licence in accordance with section 7(1) of the Credit (Administration) Act 1984; or
A specific entity held on a list maintained by the Commissioner.

Brokers are reminded it is their responsibility to ensure lenders with whom they deal fall into one of the above categories. Any broker who breaches this condition on their licence is at risk of disciplinary action.

3. What can Consumer Protection do for me?

Contact Consumer Protection if you encounter problems with a finance broker. Consumer Protection may be able to negotiate a solution between the parties.

Where appropriate, Consumer Protection may prosecute brokers for breaches of the Finance Brokers Control Act 1975 and other relevant legislation. Penalties for such breaches vary depending on the specific breach and include monetary fines and/or suspension of professional licences.

Consumer Protection may also refer matters (e.g. fraud) to other agencies such as the Australian Securities and Investments Commission and the West Australian Police.

Consumer Protection does not take legal action on your behalf, nor recoup any loss of monies. However, Consumer Protection may be able to provide you with direction on such actions including referring you to agencies that may be able to provide additional assistance.

4. What questions should I ask my finance broker

Is your finance broker licensed?
With how many lenders is the finance broker accredited? (Most finance brokers will be accredited with more than 15 lenders.)
Do I pay the finance broker any fees and are they refundable if the loan is not approved? (Most finance brokers do not charge the borrower a fee - they are generally remunerated by the lender.)
If I do not pay any fees to the broker how is the broker paid and how much does he/she receive? (Some brokers advertise that they receive the same commission no matter which lender is chosen.)
How can the broker show that the recommended loan product is actually the best product for me and not simply the product which provides the highest commission for the broker?
Does the broker belong to an external a dispute resolution service?

For more information, see the Dealing with Finance Brokers brochure and the Mortgage Broker Checklist.