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ISCOVER
James Mitchell
The majority of brokers are still failing to meet NCCP obligations when it comes to referral relationships.
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Under the National Consumer Credit Protection Act, brokers are required to have in place a referral agreement with partners that are not licensed credit representatives or do not hold an Australian Credit Licence.
In addition, brokers are required to keep a register of all referrers and let their clients know all of the processes involved in the referral activity.
According to The Adviser’s August referral partnership survey of 219 brokers, 68.7 per cent admit they have seen no change to their referral relationships since the introduction of the NCCP.
“I think that most brokers are just going on as if nothing happened,” John Denovan, senior partner at Gadens Lawyers, said.
“It’s not because they are trying to be dodgy,” he says. “It’s just because they don’t really know that if they are getting referrals from somebody who is in business they need to have a referral agreement and they need to have a referral register.”’
According to Mr Denovan, only one in 20 brokers have a referral agreement, which indicates that the majority of brokers in Australia have not taken the proper measures to ensure their referral relationships are in accordance with licensing regulations.
“I think it’s something that ASIC will look at sooner or later,” he says.
