AFG make pre-emptive move on home loan transparency

Australian Finance Group Ltd (AFG) has unveiled a new standard that summarises crucial mortgage information in a consumer-friendly format for home loan customers.

Home loans within the AFG network now require both the customer and the mortgage broker to approve a one-page summary that clearly explains why the home loan product is appropriate for the customer.

The concise one-page document spells out to the customer their requirements and objectives, the recommended product, the reasons why the product was selected and any remuneration to be paid by the lender. The document also provides similar material about other products considered before settling on the final product selection.

A new one-page disclosure will be included at the top of the existing AFG National Consumer Credit Protection documents.

The move comes ahead of the Federal Government’s best interests duty laws currently in the parliament.

AFG Chief Executive Officer David Bailey said ASIC challenged the mortgage broking sector to source the information and present it objectively and transparently so that customers clearly understand their options.

He said, “AFG is not waiting for others to set our agenda. The reality is the new obligations under the proposed best interests duty don’t come as a surprise to most mortgage brokers."

One in every 11 home loans in Australia last year was arranged through AFG’s 3000-strong national network of brokers, with settlements of more than $31 billion in the 2018-19 financial year.

“Now that AFG has lifted the bar to further demonstrate our customers are first and foremost, we are looking forward to working with ASIC and the rest of the industry on a regulatory guide to formalise the framework for the best interests duty,”