Aggregators incentivising their brokers to write white label products could face potential ASIC sanctions according to two leading aggregators.
Representatives from both Mortgage Choice and Connective have said that a future ASIC crackdown in response to a growing white label product push from aggregator intermediaries could be possible.
“Varying commissions or other ‘incentives’ paid to financial services providers for specific products can encourage bias,” head of corporate affairs Belinda Williamson told Australian Broker.
“It is possible that the industry may see a crackdown, especially if a growing number of borrowers complain that they were not offered the most financially beneficial product for their circumstances and needs," she said.
According to Connective principal Mark Haron, Connective does not incentivise brokers to offer its Connective Home Loans white label product.
However, Haron argues incentives offered by other aggregators could encourage ASIC's attention, and that it was in the best interest of the broking industry as a whole for brokers to be seen as doing the right thing by their clients.
“I think it’s very important from an industry perspective, that when or if ASIC takes a look at this and they see that brokers are doing the right thing and they are disclosing these incentives and making sure that any potential conflicts of interest are disclosed properly to the customers that they’re giving advice to,” he said.
Failure to properly disclose incentives could tarnish the image of brokers, he said.
Mortgage Choice pays the same commission rate to brokers regardless of the loan product on offer, which Williamson said ensured brokers were not swayed by one lender over another.