The Finance Brokers Association of Australia (FBAA) has welcomed the Coalition government’s support for greater disclosure of ownership structures within the financial services industry.
In its response to David Murray’s financial system inquiry, Treasury has agreed with Recommendation 40 which would require mortgage brokers and financial advisers to disclose ownership structures stating it will work towards legislation to ensure greater transparency.
FBAA Chief Executive Officer Peter White believes disclosing vertical integration will bring benefit to the industry and enable brokers to better educate clients on the products on offer. “This is a positive; the more brokers seem to be doing the right thing the better. But I suggest this move really is aimed at the financial advisers more so than finance brokers.”
Mr White believes while some brokers may have reservations the majority will use it to their advantage when dealing with clients. “You can really sell this point – If you’re owned by a major bank you are actually dealing with a firm which is indisputably regarded and has major strength behind it.”
“The mortgage business is not like it was 20 years ago when the customer took the word of a broker on face value.”
“Now customers can easily do an online search and find out information, so by being up-front you can save yourself some tricky questions.”
Mr White also said most brokers are comfortable with disclosure and feel it builds another layer of trust and helps build sustainable relationships.
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