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.