Monday 28 May 2007 LAWFUEL – The Australia Law News Wire – The Australian Securities and Investments Commission (ASIC) has obtained orders in the Federal Court of Australia in Sydney, by consent, that a number of companies trading as ‘Sample & Partners’ engaged in misleading and deceptive conduct. Mr Matthew Sample, the managing director and principal of Sample & Partners, and Mr Craig Turrell, general manager of the business, were also found to have aided and abetted the companies to breach the law. Sample & Partners is a mortgage broking business that operates in New South Wales, Queensland and Victoria. ASIC’s investigation found that Sample & Partners ‘cold-called’ potential clients and arranged for consultants to visit them, usually at their homes. The consultants made recommendations to clients about refinancing their home loan with one of a number of lenders on a panel.
Mr Sample has interests in one of the panel members, World Home Loans, to which a significant number of clients were referred to by Sample & Partners. The Federal Court declared that Sample & Partners: • represented that case studies in its sales material referred to real people who had switched to a Sample & Partners-arranged loan and had obtained the benefits shown when in fact those persons did not exist; • showed clients comparisons between Sample & Partners-arranged loans and standard loans that were misleading or deceptive because they represented that by switching to a Sample & Partners loan they would save money and pay off their home loan sooner but failed to adequately explain that to obtain this benefit clients would need to make extra repayments; • represented to clients that before advising clients to refinance, they would consider all their financial circumstances and whether they would benefit from changing loans, when in fact they did not do so; • represented that it was independent from lenders yet did not disclose Mr Sample’s interests in World Home Loans; • represented that it searched the whole market for an appropriate loan for their clients when in fact they only considered loans offered by a limited number of lenders on their panel; and • represented that it had expertise to offer insurance advice and has employed specialist staff such as solicitors and financial planners when it did not. The Court injuncted Sample & Partners from engaging in this conduct in the future, and from presenting comparisons between Sample & Partners loans and other loans unless they are based on the same level of repayments.
The orders made by the Court also require Sample & Partners to: • notify past clients of the Court orders and implement a process so that any borrower who wishes to make a claim for loss or damage can do so; • for 12 months, give new clients an informative leaflet to assist in deciding whether to use a particular mortgage broker and whether to refinance their existing mortgage; • engage an independent compliance officer to report on how the business trading as Sample & Partners is complying with the ASIC Act; and • pay ASIC’s costs. ‘People making important decisions about their home loans are entitled to believe that the information they are provided with, and are relying on, is accurate.
It is only reasonable that when people are provided with information comparing loan products, the comparisons are based on the same conditions, such as the amount of repayments involved’, ASIC’s Executive Director of Enforcement, Jan Redfern said. ‘Choosing a homeloan is likely to be one of the biggest financial decisions a person will make. Mortgage brokers, who are often relied upon to facilitate and help people through this process, have important responsibilities to ensure that the information they provide is accurate and truthful.’ Ms Redfern said. For more information about the Sample & Partners statements, which were subject to the Court’s declarations, visit the ASIC website at www.asic.gov.au. Ask FIDO, ASIC’s consumer website, at www.fido.gov.au for more help about different types of home loans and tips for reducing your mortgage. People who believe they have a claim against Sample & Partners should contact Sample & Partners in the first instance. For further information contact: Jan Redfern Executive Director, Enforcement Telephone: 02 9911 2191 Mobile: 0411 119 210 Danielle Huck ASIC Media Unit Telephone: 03 9280 3407 Mobile: 0417 540 769 Page 2 of 2