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The Financial System Inquiry has called for greater transparency of vertically-integrated broker groups, which could see brokers including bank branding on customer documents.
Released yesterday, the inquiry's final report states that often consumers do not understand the association their adviser or broker has with product issuers.
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"This association might limit the product range an adviser or broker can recommend from," the report stated.
"Of recently surveyed consumers, 55 per cent of those receiving financial advice from an entity owned by a large financial institution (but operating under a different brand name) thought the entity was independent.
"Although stakeholders have provided little evidence of differences in the quality of advice from independent or aligned and vertically integrated firms, the inquiry sees the value to consumers in making ownership and alignment more transparent.
"In particular, these disclosures should be broader than Financial Services Guide and Credit Guide rules currently require, and could include branded documents or materials.
"The inquiry believes the benefits to consumers would outweigh the transitional costs to industry of effecting branding changes."
Bank ownership of distribution has been a hotly debated topic, with industry figures divided on whether or not vertical integration creates conflicts of interest.
Freedom Home Loans managing director Troy McErvale said vertical integration is the biggest problem in the mortgage broking industry.
"I can't overstate the conflict of interest that vertical integration creates," Mr McErvale told The Adviser.
"Where the problem exists in my mind is banks are wearing too many hats," he said, pointing to their interest in aggregation networks and wholesale product providers.
Even more alarming, he said, is the major banks' ownership of about 70 per cent of the non-bank origination market.
"What the report should ask is whether this creates a disadvantage to consumers," he said.
[Related: Prominent industry figures deny fears of vertical integration bias]
