Too many brokers have an "old school" approach to low-doc lending, a broker specialising in the loans has said.
Following the release of ASIC's examination of low-doc brokers, Oasis Finance Solutions' Graham Reibelt has told Australian BrokerNews he was not surprised the regulator found compliance risks among the brokers it monitored. Reibelt said many brokers took a pre-NCCP approach to low-doc lending, from a time "where even BDMs advised brokers how to tweak a low-doc application to make it work".
"Brokers need to take a less complicated approach with low doc applications and treat every application as if it was a full-doc without tax returns, because that's all it is," Reibelt said.
To this end, Reibelt's company has developed special software to process low-doc applications, leading to what he said was a "consistent and all encompassing process". Nevertheless, Reibelt said the NCCP had brought about some "unquantifiable requirements" for low-doc lending, which would remain untested until a court ruling.
"Brokers are rightfully uncertain about low-doc broking due to ASIC inability to give rulings. Having a new regime in place where everyone is worried about being the first party in court to test out an aspect of it doesn't make for a very cohesive workplace," he said.
Reibelt also expressed concern that ASIC had expectations of low-doc brokers that went beyond the requirements imposed by lenders.
"It's a strange world when a broker can be guilty of not complying with the NCCP even though they have fully complied with the requirements of the lender," he said.