Unqualified advice a growing problem, warns FBAA

by Julia Corderoy05 Apr 2016
The Finance Brokers Association of Australia (FBAA) is warning brokers about offering unqualified advice which isn’t covered by their Professional Indemnity (PI) insurance. 
 
The FBAA has cited a recent case in which a broker was found to have breached his duty of care by the Credit Ombudsman Service and forced to pay more than $115,000. The Ombudsman claimed the broker had given incorrect and unqualified advice. 
 
In addition, the client – who was forced to sell an investment property at a substantial loss – took the legal action against the broker.
 
The chief executive of the FBAA, Peter White, says in this instance the broker went outside the bounds of his role by providing property advice and acting as a real estate agent when he did not have a licence to do so.
 
"This should serve as a warning to brokers. If you give unqualified advice, your Professional Indemnity insurance won’t cover you,” he said.
 
White is now urging brokers to educate themselves and update their knowledge of PI insurance.
 
"I would plead for any broker who may have let their education slide to update their knowledge on the rights and wrongs when it comes to advice and insurance.”
 
According to White, unqualified advice is potentially a growing problem as the line between financial planners and real estate property sales and other arms of the broking industry become blurred in an endeavour to diversify revenue streams.
 
“If you are only a qualified finance broker, act as a broker and do your best to meet your client’s needs. If you also want to assist a client in other areas like property purchasing, get the necessary qualifications and training otherwise you may be at risk of a life changing personal pay out,” White said.
 

COMMENTS

  • by 6/04/2016 2:55:14 PM

    I find it interesting that this article appears on a page where the advertisement above it is from CoreLogic promoting property information for Brokers to be up to date and to provide property information to its finance broking clients. Peter White is timely in his warning as we are seeing more and more Finance Brokers wanting larger "Referral Fees" for sending their clients to a trusted investment property partner. My stated position as a trusted investment property partner is that I do not pay Referral Fees or commissions. We cannot be called professional when we buy and sell our clients information. I certainly would not trust my GP if I believed he was receiving a fee for referring me to a Specialist. I also would have a question over the Specialist as well because I would have some doubts about whether they were the best to fix my ailment or were the highest referral payer. The credit from your client for referring them onto another specialist to take care of them is rewarded in doing the best for your client which results in repeat business and isn't that what we all want?
    Wayne McPhee
    Franchisee
    Buy Australian Properties Brisbane