There have been calls for the government to regulate the local bond origination market with industry leaders indicating legislation would ensure consumers received expert advice when dealing with a relatively unchartered financial service.
In fact, a fully constituted association to ensure the industry is regulated – self regulated that is – already exists. The National Association of Mortgage Originator (NAMO) was established to promote the interests of consumers, lenders and the industry by:
NAMO is a voluntary, non-profit association. Members subscribe to and are bound by a code of conduct of mortgage originators.
Jack Trevena, interim CEO of NAMO, notes that the industry is not completely unregulated, although there are no formal regulation measures in place. He says that 70% to 80% of the industry is made up of people who previously worked in the banking world, so it is not a free for all. But, he says, some formalised industry regulation is needed, but he doesn’t believe the government needs to legislate for the industry.
Typically, professional bodies govern the behaviour of their members, bringing into being a code of conduct and an ombudsman and thus recourse for consumers who experience poor service. The public can check the credentials of companies before engaging their services.
Gray says the Canadian bond origination industry has sound legislation governing its members. He estimates between 60% to 80% of South African bond approvals have followed the origination route against 30% in Australia and Canada.
Botha also notes that an ombudsman is essential to the sustainability of the industry which can be achieved only with consistent commitment and buy-in from the banks. Both he and Trevena say that this would go a long way to enhancing the industry’s image and promote professionalism.
Trevena says NAMO is garnering support from the financial institutions and estimates that by September, phase one of NAMO’s roll out will be complete. Once the banks have undertaken to support NAMO, Trevena says that phase two, which includes the development of accreditation criteria and requirements, can begin. He hopes this process will begin to take shape from June.
Regulation of Mortgage Origination Imminent
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