Brokers have been outspoken about goads by a cash-back company for clients to leave their brokers, but the response from regulatory bodies has been more restrained.
Last week’s article Cash-back firm urges clients to leave brokers
has generated heated debate, with many brokers concerned that cash-back firm YourShare is misleading consumers through its claims that consumers are being ripped off by paying “hidden fees” and commission to brokers.
YourShare either gets the consumer to nominate it as the new broker, or refinances the loan for a better deal.
“Generally speaking we can get a better rate for the client,” said CEO Ron Hodge, who did not see the practice as unfairly poaching clients from brokers, as he thought willingness to change showed the client did not have a strong relationship with their broker.
However, brokers voiced concerns about the business model of YourShare, its lack of ongoing service to clients, its claim that brokers are charging clients ‘hidden fees’, and not making clear that the lender pays the broker commission rather than the client.
Many brokers called on regulators to investigate.
But an ASIC spokeswoman said she could not comment specifically on the statements made by YourShare, and it is not ASIC’s practice to confirm whether it has received complaints about a specific business given they have been made confidentially.
However, she pointed out that guidelines in relation to the advertising of financial products are contained in Regulatory Guide 234 Advertising financial products and services (including credit): Good practice guidance
The regulations state: “Consumers are heavily influenced by advertisements for products and services when making financial decisions and seeking financial advice. Advertisements that do not fairly represent the product or its key features and risks, or the nature and scope of the service, can be misleading and create unrealistic expectations that may lead to poor financial decisions.”
The spokesperson said if anyone had concerns about any statements being made, to lodge complaints here.
Australian Competition and Consumer Commission has also been asked to look into brokers' concerns and indicated it would respond later this morning.
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