"A fully advised product means you have to be able to demonstrate that you've assessed the customers' ability to pay, the product is suitable, you've got evidence for that, that you've considered different scenarios, that you've done the confirmation with the customer that they understand. "The regulators are going to increasingly ask questions about sale practices and mortgages." Mr Hartzer's remarks follow a series of scandals in the financial planning industry – at CBA, NAB and Macquarie – and controversial efforts to tighten regulation in the sector. His comments also come as the residential market approaches a peak, in Sydney at least, and the bank regulator, the Australian Prudential Regulation Authority, moves to slow lending into the housing market, especially to investors. Mr Hartzer's warning struck a chord with Aussie founder John Symond, who said extra compliance was already adding 30 minutes to the loan-processing time for his brokers. "At the end of the day I hope it's not over-regulation. It's in everyone's interests to have good, solid regulation but certainly not over-regulation," Mr Symond told The Australian Financial Review. Inside the conference, Mr Symond underscored his longstanding advice to avoid risky lending. "We've always worked with our brokers to make sure they take a hard look at who we try to help. "I'm not a believer in next-to-no-deposit home loans. We don't want to see people being forced to sell out of their homes. Our advice is not to over-commit." Mr Symond pointed to off-the-plan apartments as one area of heightened risk in the current market. "All along we've said be very careful [with] off the plan. Off the plan is a roulette game."
Westpac's CEO, Brian Hartzer, has said that mortgage broking will be the next financial service that will come under heavy scrutiny from regulatory authorities in Australia. The Australian Securities and Investments Commission is also investigating whether banks are using robo-advisers to make money off of clients. This would force banks to demonstrate that they have assessed the customer's ability to pay, that the product is suitable for that customer, and that the customer fully understands the terms of the loan.