Prime non-bank lender Resi Mortgage Corporation has lobbied the Federal Government for a dedicated consumer education program to be an essential part of the mortgage industry’s new regulatory model.

 

Resi’s Head of Consumer Advocacy, Lisa Montgomery, says the Federal Government must acknowledge the distinct lack of education for borrowers on the mortgage industry, which would update them on the changes since industry deregulation more than twenty years ago - when non-bank lenders first emerged.

”At present, borrowers are all consumed by rates and are moving haphazardly into the future. Without the benefit of being informed about what will happen to their rates if competition ceases to exist, many are unaware that the choices they are making now, will have potentially detrimental effects in the future,” Montgomery said.

 

“It is therefore clear that as part of a broader regulatory framework there must be an education program which informs borrowers of the new playing field to which they have access to, at the same time ensuring there is a fair and competitive mortgage market for all.”

 

“Importantly, this would also provide an additional layer of consumer protection for borrowers by empowering them as an active player in their financial future, rather than a passive participant,” she added.

 

“It’s long overdue and something Australian borrowers need and deserve.”

 

Montgomery says there is an entire generation of Australians, who have, in the absence of any dedicated education program, had little choice but to navigate their own way through an evolving mortgage market place - and protect their finances at the same time.

 

She says “if such a program was introduced after financial deregulation it would have enabled consumers to keep pace with all the changes and addressed much of the misinformation and misconceptions which have most recently been attributed to the non-bank market segment.”

 

However, as it currently stands, with so many lenders conveniently labeled as non-banks - due to a lack of consistency with industry terminology as well as the absence of any dedicated industry representation for the sector, it has fuelled the lack of public understanding as to the role each lender plays in the market and what those differences will mean for them.

 

 

Montgomery says it’s time borrowers remembered the critical role prime non-banks initially played in breaking the stranglehold previously held by the banks, and the benefits they have enjoyed since that time.

 

“This will help consumers realise exactly what they stand to lose if the competition provided by non-banks ceases to exist i.e. that they will once again face a bank oligopoly - and all that it is associated with it.”

 

A government endorsed consumer program, introduced as part of the new regulatory regime, would integrate information for consumers on the mortgage industry and detail what is available to them.

 

“This would ensure we do not overhaul the financial system again, and once more, fail to educate consumers,” Montgomery added.

 

Such a program would seek to educate the market and consumers on: 

Montgomery says this program would go a long a way to supporting the current crop of Australian borrowers who are understandably feeling confused, angry and vulnerable in relation to all the lenders and products available to them on the market.

 

With the Federal Government making the welcome announcement that it will assume responsibility for all forms of consumer credit, whilst also investigating the proposal for a government backed mortgage agency – early signs for the new industry platform are extremely positive.

However, Montgomery says, “an education program will provide the perfect complement to these new initiatives and will provide untold, long term benefits for consumers.”

If you would like any information on this press release then contact Resi by clicking here.