find the latest legal job
Corporate Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Highly-respected, innovative and entrepreneurial Not-for-Profit · Competency based Board
View details
Chief Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Dynamic, high growth organisation · ASX listed market leader
View details
In-house Projects Lawyer | Renewables / Solar | 2-5 Years PQE
Category: Generalists - In House | Location: All Australia
· Help design the future · NASDAQ Listed
View details
Insurance Lawyer (3-5 PAE)
Category: Insurance and Superannuation Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Dynamic organisation ·
View details
Legal Counsel
Category: Corporate and Commercial Law | Location: North Sydney NSW 2060
· 18 month fixed term contract · 3-5 years PQE with TMT exposure
View details
Mixed reactions to margin lending code

Mixed reactions to margin lending code

PIGGY IN THE MIDDLE: Legal opinion polarised over new margin lending code Different predictions for the proposed reg

PIGGY IN THE MIDDLE: Legal opinion polarised over

new margin lending code

Different predictions for the proposed regulations for margin lending - including greater protections for consumers but increased costs for providers - have been offered by legal experts in the field.

Ben Phi, senior associate at Slater and Gordon where a class action is being planned on behalf of Storm investors, said the firm welcomed the plan for proceedings to be commenced against financial planners and stockbrokers.

"Depending on how these reforms are actually enacted, it could actually increase the onus on margin lenders to ensure that investors are not only kept informed about the product but also that the margin loan itself ... offered to the borrower is suitable, and appropriate, given their personal financial circumstances," he said.

Peter Jones, partner at Allens Arthur Robinson, said that while it is yet to be seen how the code will actually take effect, the firm had fielded some concern from margin lenders.

"... It looks as if the lenders will have to be licensed under the Corporations Act and that will mean there is a cost to obtaining and maintaining the licence..." he said.

"If you're a happy customer at the moment you'll suffer increased costs, if you are a lender that has a good client base and you're not suffering losses with your client base, then this is going to increase costs for you," he said.

Jones believes that advisers who are appropriately trained will help consumers understand the risks but warns that relying too much on disclosure documents is risky because often people don't absorb the information.

"Even though you might try to explain things to people in documents, the explanations can be too complex and too long for the message to really get through. So that's the challenge with this reform - to make people aware of the risks and not get too bogged down in technical disclosure requirements," he said.

Phi said the firm hopes the Government will introduce an alternative compensation scheme to the recent professional indemnity insurance that has been made mandatory.

"We're still aware of and encountering financial planning firms that are either underinsured or who have taken out professional indemnity policies that contain broad exemptions which basically render their value to the consumer as being relatively low," he said.

Jones said that increasing the levels of consumers' financial literacy should be a priority of the Government. "It's not that this particular code is going to do the job by itself, it needs to be part of a co-ordinated package to increase, generally across the community, levels of financial literacy and understanding," he said.

- Sarah Sharples

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Mixed reactions to margin lending code
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
LCA president Fiona McLeod SC
Aug 17 2017
Where social fault lines meet the justice gap in Aus
After just returning from a tour of the Northern Territory, LCA president Fiona McLeod SC speaks wit...
Marriage equality flag
Aug 17 2017
ALHR backs High Court challenge to marriage equality postal vote
Australian Lawyers for Human Rights (ALHR) has voiced its support for a constitutional challenge to ...
Give advice
Aug 17 2017
A-G issues advice on judiciary’s public presence
Commonwealth Attorney-General George Brandis QC has offered his advice on the public presence of jud...
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...