The Australian Competition and Consumer Commission has reviewed a number of notifications which broadly require the mortgage brokers of four lending businesses to be members of the Mortgage Finance Association of Australia (MFAA).
The ACCC has decided to allow the protection from legal action for these arrangements to continue.
The third line forcing notifications were originally lodged by Aussie Home Loans, Mortgage Choice, ING Bank and Virgin Money in 2007 and 2008. During the course of the review, ING Bank withdrew its notification and Virgin Money advised that it does not currently engage in the conduct.
"The ACCC believes the arrangements continue to deliver a benefit to the public, notwithstanding the commencement of a national regulatory regime for the credit industry in 2010," ACCC chairman Rod Sims said.
The MFAA's membership requirements impose higher educational and certain other professional standards on its members than the regulatory regime.
"The ACCC considers requiring MFAA membership is likely to assist those lending businesses to ensure that their brokers are of a consistent high standard and to meet their compliance obligations under the National Consumer Credit Protection Act," Mr Sims said.
The ACCC acknowledges requiring MFAA membership restricts choice of professional association for these brokers, thereby limiting competition from other similar professional associations. However, given the small number of mortgage brokers currently affected by the notified conduct compared to the overall size of the industry, the ACCC considers that any public detriment is likely to be minimal.
Further, the MFAA membership requirement is only imposed by two industry participants. There are a large number of other businesses that individual brokers can work for if they disagree with the MFAA membership requirement.
Following the receipt of a complaint in 2011, the ACCC commenced its review on the basis that there had been relevant changes to the national regulatory regime since the ACCC originally assessed each of the notifications.
Notification provides protection for conduct that might otherwise be at risk of breaching the exclusive conduct provisions of the Competition and Consumer Act 2010. Once lodged, protection for the notified conduct begins automatically, or in the case of third line forcing, after 14 days. The ACCC may revoke a third line forcing notification where it is satisfied that the likely public benefit to the public will not outweigh the likely detriment.
More information about the ACCC's review of the notifications, including public submissions received and a copy of the ACCC's Statement of Reasons, are available from the ACCC's website www.accc.gov.au/ExclusiveDealingRegister.