Mortgage brokers should be subject to a personal best interest duty towards their clients in the same fashion as financial advisers, according to the Financial Planning Association (FPA).
In a submission filed with the Federal Treasury responding to legislation covering mortgage broker remuneration, the FPA said it believed the best interest duty needed to reside with the mortgage broker rather than the Australian Credit Licensee.
In doing so, the FPA said this would bring the treatment of mortgage brokers into line with that applying to financial advisers and under the Tax Practitioners Board Code of Professional Conduct in respect of tax (financial) advisers.
“It is appropriate that these best interest duties are set as broad statements of principle and that they apply to financial services professionals as a personal duty,” the FPA submission said. “While the drafting of the various duties is similar, their operation in practice is often governed by additional guidance from regulators on how to comply with the duty. It is at this stage that it is vital that regulators take a consistent approach to the extent that it is possible.”
“To be consistent it is also important that the proposed best interest duty for mortgage brokers is crafted as a personal duty on the broker, rather than only as a duty on the Australian Credit Licensee. Complying with materially different regulatory standards adds cost to financial services which is ultimately borne by consumers through higher prices,” the FPA submission said.