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The head of a major aggregator says that brokers should be educating their customers about good and bad debts, particularly those who take on additional debt after obtaining a mortgage.
One of the key findings to come out of the ASIC remuneration review was the educational value mortgage brokers provide to Australian consumers. ASIC found that brokers can help improve consumer understanding of home loans and financial literacy.
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Speaking to The Adviser, Connective executive director Mark Haron encouraged brokers to advise their clients around credit and how to manage their debts.
“As long as brokers stick to products and policies and structures that fall under a credit advice model, they should absolutely embrace it,” Mr Haron said. “They should be doing that as much as possible for their customers.
“One area where education is crucial [and] quite often what brokers have seen is that customers have taken out additional debts after getting the home loan and, in that process, have created financial hardship themselves.
“So, educating the customer about what good and bad debts are, and not to rush into getting these supposedly cheap or interest-free loans that bite them down the track, is really crucial. That is definitely an area where brokers can work to help customers.”
Mr Haron’s comments are timely, with Christmas just around the corner and many Australians choosing to fund their seasonal spending with credit.
Data from comparison website finder.com.au shows that Aussies spent $397 million in credit card interest payments last December. The figures reveal that the average amount owed after the holiday season was $1,666 per credit card across Australia.
