The Law Handbook 2024

452 Section 5: Managing your money • a reasonable estimate of all fees likely to be paid by the consumer to the credit provider; and • the amount of credit available to the consumer after such amounts are paid out of the loan. Brokers and responsible lending obligations Since 1 July 2010, finance brokers, and others providing credit assistance, have been obliged to make reasonable inquiries into a consumer’s financial situation, requirements and objectives before suggesting that a consumer enters into a particular loan or increases a credit limit on a particular loan. Brokers bear the corresponding duty to make a preliminary assessment using this information in relation to the suitability of any loan before recommending it, and are prohibited from suggesting that a consumer enter into a loan, or increase a credit limit on a particular loan, if the contract is unsuitable for the consumer (ss 115–120, 123 NCCP Act). The criteria for assessing suitability of a loan are generally the same as those discussed above regarding the responsible lending obligations of credit providers (see ‘Responsible lending obligations: Suitability’ in Chapter 5.7: Understanding credit and finance). A finance broker’s failure to acquit its obligations under the NCCP Act gives an affected consumer a right to apply to a court or external dispute resolution scheme for a compensation order under section 178, or another order compensating for loss or damage under section 179. Best interest duty From 1 January 2021, in response to recom- mendations of the Financial Services Royal Commission, mortgage brokers have a duty to act in the best interests of the consumer and must give priority to the consumer’s interests when providing credit assistance (s 158LA, LB, LE, LF NCCP Act). ASIC has released regulatory guidance about how it expects brokers to comply with these obligations in Regulatory Guide 273. Former Victorian law Part 4A of the Consumer Credit (Victoria) Act 1995 (Vic) (‘ CCV Act ’) regulated the activities of finance brokers after 1 July 1999, but only applied when a fee was charged directly to the consumer by a broker. Part 4A continued to apply to broking activities in Victoria until 1 January 2011. Among other things, the CCV Act limited the circumstances in which a broker was entitled to charge fees. Caveats In the past some brokers included a clause in their documents of appointment that gave them the right to place a caveat over the consumer’s property, which prevented the consumer from disposing of that property until the broker had been paid. Since 1 January 2011, this practice (including the threat to lodge a caveat) has been prohibited under section 114(6) of the NCCP Act. Contacts Australian Financial Complaints Authority (AFCA) Tel: 1800 931 678 Email: info@afca.org.au Web: www.afca.org.au AFCA provides consumers and small businesses with fair, free and independent dispute resolution for financial complaints Australian Securities and Investments Commission (ASIC) Level 7, 120 Collins Street, Melbourne Vic 3000 Tel: 1300 300 630 Web: www.asic.gov.au Consumer Action Law Centre (CALC) Tel (consumer legal advice line): 1800 466 477 (Tuesday to Thursday, 10am to 1pm) Tel (Koori help line): 1800 574 457 (Monday to Friday, 10am to 1pm and 2 pm to 5 pm) Web (online legal help): consumeraction.org.au National Debt Helpline Tel: 1800 007 007 Web: ndh.org.au