THE Australian Securities and Investments Commission has obtained orders in the Federal Court against national mortgage broker Sample & Partners, who had engaged in misleading and deceptive conduct.
Matthew Sample, the managing director and principal of Sample & Partners, and Craig Turrell, general manager of the business, were also found to have aided and abetted the companies to breach the law.
Sample & Partners currently operates in
ASIC’s investigation found that Sample & Partners cold-called potential clients and arranged for consultants to visit them, usually at their homes.
The consultants made recommendations to clients about refinancing their home loan with one of a number of lenders on a panel. Sample has interests in one of the panel members, World Home Loans, to which a significant number of clients were referred to by Sample & Partners.
The Federal Court declared that Sample & Partners represented case studies in its sales material referred to real people who had switched to a Sample & Partners-arranged loan and had obtained the benefits shown when in fact those persons did not exist.
Further, the company showed clients comparisons between Sample & Partners-arranged loans and standard loans that were misleading or deceptive because they represented that by switching to a Sample & Partners loan they would save money and pay off their home loan sooner but failed to adequately explain that to obtain this benefit clients would need to make extra repayments.
The company was also guilty of representing to clients that before advising clients to refinance, they would consider all their financial circumstances and whether they would benefit from changing loans, when in fact they did not do so.
The company represented that it was independent from lenders yet did not disclose Sample’s interests in World Home Loans and represented that it searched the whole market for an appropriate loan for their clients when in fact they only considered loans offered by a limited number of lenders on their panel.
Finally, the Court found the company represented that it had expertise to offer insurance advice and has employed specialist staff such as solicitors and financial planners when it did not.
The Court injuncted Sample & Partners from engaging in this conduct in the future, and from presenting comparisons between Sample & Partners loans and other loans unless they are based on the same level of repayments.
Further orders were made for the company to notify past clients of the Court orders and implement a process so that any borrower who wishes to make a claim for loss or damage can do so and for 12 months, to give new clients an informative leaflet to assist in deciding whether to use a particular mortgage broker and whether to refinance their existing mortgage.
The company will also need to engage an independent compliance officer to report on how the business trading as Sample & Partners is complying with the ASIC Act; and pay ASIC’s costs.
ASIC’s executive director of enforcement Jan Redfern said people making important decisions about their home loans are entitled to believe that the information they are provided with, and are relying on, is accurate.
“It is only reasonable that when people are provided with information comparing loan products, the comparisons are based on the same conditions, such as the amount of repayments involved.
“Choosing a homeloan is likely to be one of the biggest financial decisions a person will make. Mortgage brokers, who are often relied upon to facilitate and help people through this process, have important responsibilities to ensure that the information they provide is accurate and truthful,” Redfern concluded.
Australian Property Journal
