I welcome the news that the corporate watchdog, ASIC has announced it’ll be paying “particular attention” to broker-introduced mortgages and keeping an eye out for fraudulent activity.
The moves will make a real difference in local markets that have become over-bloated with Financial Planners and Mortgage Brokers.
ASIC’S report on enforcement outcomes in the six months to June 2017, shows 32 criminal charges had been laid, 57 investigations commenced and 80 investigations completed.
That’s a disgrace and proof positive of what industry specialist have been saying for quite some time.
To July 2017, twenty-three people have been removed from the financial services and $618.8 million paid in compensation and remediation.
Any consumers who feel they have been misled by a financial broker or advisor, or feel any advice given/loan set up or service provided has disadvantaged them, should seek compensation. Many brokers “scare mongered” clients into fixing rates around 2013/14 for extended periods (in many cases to protect their own commissions) and subsequently those clients have paid tens of thousands more than they should have.
Another key area Brokers exploit is the “add on” services they purport to be experts in- accountancy services, super set ups, insurance, property advice and purchase recommendations etc. are just some areas where trusting consumers get ripped off.
Essentially many brokers receive undisclosed payments/incentives and or commissions for their “recommendations” and “referral’s” which are never disclosed to clients.
Be very wary of the motive behind any financial advice and be very aware that there is often much more going on behind the scenes than apparent.
I personally recall a local finance broker who ran “information nights” for her data base, whereby she heavily promoted her clients buy shares in Guvera. It was later exposed that “promoters” received up to 10% commissions as well as overseas trips for allowing access to their client bases.
We need to remember that while home buyers struggle to get into the market, a bad finance deal ruins them for life.
This ASIC pledge to focus on “enforcing higher standards in the financial services industry” is a good start to what needs to be done to bring what he says is an out of control industry to heel.
ASIC says it will now apply extra scrutiny to financial advisers’ obligation to act in clients’ best interests, as well as their responsibility of providing “appropriate” advice to clients.”
As well they’re looking at Australian financial services (AFS) licensees’ failure to deliver ongoing advice-advice that their clients pay fees to receive.
Under the blitz corporate governance will also be held to increased scrutiny.
The commission says it will focus on what is expected of lenders in assessing loans (e.g., fraudulent loans) submitted by mortgage brokers, and what is required to meet the obligations for assessing and verifying the borrower’s financial circumstances.
In the 2016–17 period, ASIC identified “gatekeeper culture” in markets, financial services and credit as areas of focus.
“We are focusing on culture and incentives that result in poor financial advice, irresponsible lending and mis-selling to retail investors and consumers, which can undermine trust and confidence in the financial system… [and] we continue to focus on culture and incentives that drive poor conduct, which can undermine good governance practices and risk management systems and threaten market integrity.”
It is also time for big changes proposed to volume based incentives and ‘soft dollar’ payments from banks to brokers.
I am still calling for a Katter Style Royal Commission that focusses heavily on the mortgage broker and financial planner sector.
That is just key to bringing some level of stability and management back to the property sector if we are to ever end the housing crisis.