Brokers need to be more transparent, says banking association

by Julia Corderoy27 Mar 2015
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.”
 

COMMENTS

  • by Neil 27/03/2015 10:12:43 AM

    What! After all the issues around the likes of Storm Financial (and BoQ) and CBA staff offering poor financial advise (and admitting as much) brokers are again in the cross-hairs! Wake up COBA, and tackle a real issue. Do banks declare who their largest stakeholders are when a staff member approve a home loan? Really. What nonsense.

  • by GC 27/03/2015 10:26:24 AM

    In my 17 yrs in the industry I have constantly come across instances where the client didn't understand the loan they had and were given the wrong loan and wrong advice - and 99% were as a result of the banking staff. The majority of bank staff are untrained and don't give a sh*t about the quality of advice they give the customer....because they are on the banks payroll so it wont hurt their pockets if the client moves away to another lender.

    Brokers are far more educated, responsible, honest, trustworthy and forward thinking. If we screw it up for the client it can cost dearly. It 's about time groups like this and ASIC seriously looked into the banks behaviour. It's also about time people put up the proof of their comments instead of simply coming out with rubbish like this and just trying to justify their existence.

  • by SEQ Broker 27/03/2015 10:46:06 AM

    Gak. Another industry body attempting to prove with the use of BS that they are still valid. Wind up your useless industry body. Additional, please declare who owns you!