The government must act on recommendations that require mortgage brokers to disclose ownership structures, says a large banking association.
The Customer Owned Banking Association (COBA) supports the recommendation made in the Final Report of the Financial Systems Inquiry, which states that greater transparency regarding the nature of advice and the ownership of brokers would help to build confidence and trust in the financial advice sector.
“Often, consumers do not understand their financial adviser’s or mortgage broker’s association with product issuers,” the Final FSI Report notes.
“55% of those receiving financial advice from an entity owned by a large financial institution (but operating under a different name) thought the entity was independent.”
In its response to the Final Report released yesterday, COBA says is vital for the health of the industry that consumers understand who they are dealing with.
“The recommendation acknowledges that vertical integration of product manufacture and distribution by large financial institutions can be detrimental to consumers seeking independent advice,” the association said.
“COBA urges the Government to implement measures that require disclosure of ownership structures in product branding, including on websites, on shop-fronts and on any official documentation including disclosure documents. Consumers must be aware of broker and adviser linkages to large, vertically-integrated players.”