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Following Refund’s announcement that it has entered voluntary administration, the safety of aggregators has been questioned.
Last week, The Adviser reported that many Refund brokers are currently seeking unpaid trail from the sub-aggregator.
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FirstPoint NB director Troy Phillips said this would not have happened if Australia’s aggregators had been regulated.
“We need some transparency when it comes to our aggregation groups. At the moment, 40 per cent of the aggregation market is controlled by National Australia Bank, which is heavily regulated by APRA. However, the remaining 60 per cent remains unregulated,” he told The Adviser.
“Aggregators process cheques – in essence, they are high volume, low margin businesses. A lot of brokers that aggregate through some of the smaller players believe they have trial for life – but is this really the case?”
Mr Phillips said promises made by some of Australia’s aggregators including ‘trail for life’ had not been properly tested.
Hence, if an aggregation group was to fold, many brokers could find themselves in an uncomfortable position – similar to the fate currently being suffered by Refund brokers.
“Australia’s aggregators need to be regulated by law. It is not a job for the MFAA, but the aggregators themselves,” Mr Phillips said.
“Regulation may result in some industry consolidation, but ultimately that is for the best, because we only want independent groups that can stand up, be strong and weather any storm.”
