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ISCOVER
Jessica Darnbrough
More than one third of brokers are failing to comply with NCCP requirements when it comes to referral relationships, leaving themselves open to a comprehensive investigation of their business by ASIC.
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According to a recent The Adviser straw poll, more than 36 per cent of brokers do not currently keep a referral register.
Of the 309 respondents, 63.8 per cent of brokers said they did the right thing and kept an up-to-date register of their referral partners.
Under the National Consumer Credit Protection Act, brokers are required to have a referral agreement with partners that are not licensed credit representatives or do not hold an Australian Credit Licence.
Speaking to The Adviser, Gadens Lawyers’ Jon Denovan said brokers who fail to meet this “basic” NCCP requirement leave themselves open to ASIC investigation and penalties.
“Often, ASIC will just slap a broker on the wrist and tell them to start keeping a register. But because it is very easy for ASIC to determine whether or not brokers are keeping a referral register, they may be inclined to investigate a broker that does not have one in place even further and look for other areas where the broker does not comply with the legislation,” he said.
Mr Denovan said it was reasonable to assume that many brokers don’t realise they need to keep a referral register.
“Keeping a referral register is easy. It is as simple as keeping a word document of names on their computer. I think the reason so many brokers don’t have one in place is because they don’t know they have to.
“It is important for brokers to ensure they are compliant under NCCP, less they be penalised by ASIC.”
