ASIC cracks down on low-doc brokers

The competition regulator ASIC, says it's concerned that some mortgage brokers aren't complying with new consumer credit laws, particularly in the area of low-doc mortgages.

ASIC commissioner Peter Kell has warned that although mortgage brokers have largely kept in line with the new responsible lending laws, "there is room for improvement".

Although ASIC didn't judge whether the loans in questions were appropriate and subsequently didn't find any evidence of equity stripping, the regulator still found evidence of non-compliance, "particularly where credit assistance was provided for loans promoted as low documentation".

Low-doc loans played a crucial part in the lead up to the subprime crisis in 2008. They are typically sought by the self-employed.

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