Predictions that broker white label recommendations may face future ASIC scrutiny are being met by moves from the MFAA and its lawyers to update conflict guidance for brokers.
With predictions from some aggregators that ASIC may soon look more closely at incentives to sell white label products, Gadens Lawyers senior partner Jon Denovan says the MFAA will soon release an updated 'Conflict Module' to keep broker groups on the right side of the law.
"The MFAA has been able to lead industry and ASIC opinion by developing strong workable policies that balance consumer interests and business interests appropriately. I’m hopeful that will be the case here," Denovan told Australian Broker Online.
Denovan said white label incentives are a complex topic with "many traps and duties that need to be considered", and the new conflict module will assist the industry to adopt best practice.
Denovan said most questions would arise for regulators if a broker decides to 'change hats'.
"If the broker is clearly acting as a product distributor, then 'buyer beware' applies - just like a bank can set its own interest rate," he said.
However, Denovan said customers should be in no doubt which 'hat' a broker is wearing.
White labels could still be threatened by regulation if questionable practices do arise, he said.
"There is no doubt that sooner or later some fringe operator will make a mess of things and ASIC will review practices in this sector."
Denovan said it was important to balance consumer protection and to facilitate busienss.