Code of Practice & Disputes Resolution Service

Introduction

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Outline of the Code of Practice

The Finance Brokers Association of Australia Limited (FBAA) Code of Practice ("Code") is intended to promote good relations between Finance Brokers that are Members of the FBAA and Clients, Credit Providers and others involved in the finance industry. It will also promote efficiency in transactions by describing standards of good practice and the level of service to be expected from Finance Brokers.

The Code has been prepared with an understanding that personal integrity is a quality which cannot be created or preserved by written rules alone. Codes of Practice, like laws, cannot substitute for a sense of honesty, fairness and decency. Ultimately, the ethical conduct of the business of a Finance Broker depends upon the understanding and judgment of the principals, employees and subcontractors. The FBAA expects that the actions of all its Members will reflect ethical standards that will bring credit to them, the FBAA and the industry.

The Code is part of a voluntary self regulatory scheme and acknowledges that various state or federal laws exist to regulate the conduct of Finance Brokers, in addition to the codes of other professional associations that Members may be bound by.

The Code sets standards of behavior, accountability and record keeping that will minimize disputes with Clients and Credit Providers and thereby engender confidence in FBAA Members by professional indemnity insurers and thereby minimize the risk profile and consequent cost of professional indemnity insurance.

The Code also includes the Finance Brokers Association of Australia Dispute Resolution Service ("DRS"). All Finance Brokers subject to the Code will be bound by the terms of the Code and may have access to the DRS. The Code sets out the responsibilities of participating Finance Brokers and also requires them to establish an internal process for resolving disputes with Clients, Credit Providers and others. The Code does not create legal rights for Clients. Any breach of the Code by a Finance Broker may give rise to binding orders or sanctions being imposed on the Finance Broker under this Code and may result in suspension or termination of membership of the FBAA, however, no additional monetary penalties may be imposed.

The Code recognizes that the primary responsibility of a Finance Broker is to the Client. However, in regard to some types of Credit Facilities, the Finance Broker may also act as a limited agent of the Credit Provider and therefore may act for both parties and have a responsibility and duty of care to both parties. In determining if the Finance Broker is an agent of the Credit Provider the FBAA and DRS is guided by Bulletin No. 36 of the Banking and Financial Industry Ombudsman dated December 2002 (formerly Australian Banking Industry Ombudsman), section 11B(5) of the Privacy Act 1988, and by any other applicable law.

Objectives of the Code

The Code is intended to:

1. Describe standards of good conduct and service to be expected of Finance Brokers.
2. Promote informed and effective relationships between Clients, Credit Providers and Finance Brokers.
3. Promote efficiency in transactions in which Finance Brokers are involved and the appropriateness and effectiveness of the Brokers' services to Clients and Credit Providers.
4. Provide for consultation with Consumer Representatives in dispute resolution and reviews of the Code.
5. Promote the effective resolution of disputes between Finance Brokers, Clients and Credit Providers. The Code provides for enforcement of its provisions, the making of orders and imposition of sanctions. A breach of the Code does not give rise to any legal right or liability.

Principles of the Code

The objectives of the Code will be achieved and the provisions of the Code will be applied having regard to:

1. The requirement of Finance Brokers to meet the standards established at common law and applicable Australian state, territory or federal statutory requirements.
2. The need for Clients and Credit Providers to be made aware of the relevant provisions of state legislation including the Uniform Consumer Credit Code, Trade Practices Act and Fair Trading Acts.
3. The need to promote effective competition in the finance broking industry and be well informed of the products and services available from the Credit Providers.
4. Circumstances or requirements imposed upon the Finance Broker by a Client or Credit Provider.
5. The need to conduct investigations under the DRS by the Mediation Officer and hearings of the Referee in private and closed to the public.

Monitoring and Review of the Code

The Code will be monitored by the FBAA Compliance Subcommittee (as appointed from time to time by the National Executive Committee). It will comprise of a Consumer Representative, a Credit Provider, a practicing Finance Broker, a Legal Practitioner and a National Executive Committee of the FBAA. The Code is a "living" document and will be formally reviewed by the Compliance Subcommittee every year. The Compliance Subcommittee may issue guidelines as to the implementation and interpretation of the Code (not being inconsistent with the Constitution of the FBAA and the law). However, the Code can be adapted in the meantime to deal with any problems which may arise that require urgent attention and implementation of additions or amendments to the Code or DRS. All participating Finance Brokers are required to make information concerning the Code available to Clients and Credit Providers in a manner recommended by the FBAA or as otherwise approved by the FBAA.

Date and Commencement of the Code

The date of Commencement of the Code is 18th November 2005. This Code replaces an earlier code which continues to have residual effect regarding matters that occurred during the period of its currency (save for disciplinary matters currently being conducted as at the date of the Commencement).

How to Amend the Code

This Code may be amended by passing an Ordinary Resolution at an FBAA General Meeting (including an Annual General Meeting). However, should an amendment to this Code be required to ensure that the Code complies with the law, then such amendment may be made by a resolution of the National Executive Committee.

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