The Federal Government has released the first part of a plan to reform Australia's financial services industry with the release of a Green Paper.
The paper outlines plans for the Commonwealth and states to transfer the remaining financial services regulation from state level to federal level.
Under the plan, the financial services industries placed under federal control will be mortgages, mortgage brokers, margin lending, non-bank lending and trustee companies.
"On mortgages, it's absolutely critical that the advice new borrowers receive is top-quality and that they are not getting into debt they can't service. I am also concerned about reverse mortgages and the number of people taking them up without a clear understanding of the implications," Minister for Superannuation and Corporate Law Senator Nick Sherry said.
Industry bodies, Senior Australians Equity Release Association of Lenders (SEQUAL) and the Mortgage and Finance Association of Australia (MFAA) are both in favour of the changes.
As part of its latest research, SEQUAL surveyed over 1000 people and found that 80 per cent knew the term 'reverse mortgage', but only 50 per cent could actually pick the right definition, SEQUAL executive director Kieren Dell said.
"We've been saying since we did our research that there is no doubt there is a greater need for consumer education on the issue of reverse mortgages, because they are not well understood," Dell said.
"It is crucial for the industry and borrowers alike that one set of rules apply and it's important that these rules are consistently enforced across the nation," he said.
