Cannon to brokers: 'Stiff' clients at your own risk

by BN15 Nov 2012

Firstmac managing director Kim Cannon has said brokers and aggregators are too often focused on income, rather than finding out what’s best for clients – and that could have serious repercussions.

In an exclusive multimedia interview, Cannon told Australian Broker that broking groups need to clean up their act if they want to avoid ASIC stepping in to further regulate white label products.

“It’s all about what the aggregators are pushing people to do. It’s all about income now," he said.

"There’s been a number of lenders out there who have been involved in white labelling who used recent rate drops to stiff the clients, to take a bit more extra margin.”

Cannon says the possibility of ASIC regulating white labelling is a serious concern.

“The next thing you look at is the licencing side of things – is what has happened in the financial planning industry about to overtake the broking industry in the near future? Is the quest for commission going to be outlawed because people weren’t selling the right products?”

Jon Denovan of Gadens Lawyers agrees, saying the system in place is not different from any other industry in providing two levels of competition, but that it’s inappropriate for brokers to be pushing white label products in the sole interest of personal gain.

“Competition is good for consumers and it’s good for the economy – but competition that damages consumers by having a trusted advisor sell them something that isn’t right of the them is bad competition.”

Want to see the full multimedia interview? View it now, on Australian Broker TV.

COMMENTS

  • by Clint Waters 15/11/2012 10:15:39 AM

    Fair point but our white label product (PLAN Lending) is often a brilliant product offering price wise (no controls on margin are available on our suite of products which I think is a good thing).

    Because it lacks some bells and whistles (like offset) its still not our number one lender/product but I see it as a win-win scenario for clients not needing certain features.

    Our Credit Proposal document discloses our earned fee as well of course.

    Brokers loading rates for bottom line gain is not a good thing IMO.

  • by Shawn French 15/11/2012 10:24:35 AM

    If a broker puts their interest ahead of that of the clients then they should be penalised, not the industry. I don't know of any brokers who would not put the clients interest first and foremost in every dealing. You would n't be in business for long or have a client base if you didn't look after your clients all the time every time.

  • by Brisbroker 15/11/2012 10:32:11 AM

    Can someone please explain why Australian Broker thinks that we hang on every word that comes out of this blokes mouth. Any chance of getting an impartial opinion from someone who isn't just pushing their own barrow?