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Steven Cross
ASIC has made it very clear that any broker who accepts commissions from a lender cannot label themselves “independent”.
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Speaking to The Adviser, a spokesperson for the corporate regulator said where a broker receives a commission from a lender, it would be difficult for that broker to be considered independent.
“The use of the words 'independent' and 'unbiased' in relation to provision of financial services is restricted under s923A of the Corporations Act 2001,” the spokesperson said.
While the National Consumer Credit Protection Act does not have the same restriction, the spokesperson said similar restrictions have been proposed in the exposure draft of the National Consumer Credit Protections Amendment (Enhancements) Bill.
ASIC’s stance on the use of the term “independent” is at odds with the regulator’s RG 206 Credit Licensing: Competence and Training.
In this piece of legislation, ASIC uses the expression ‘independent home loan credit assistance’.
However, ASIC has defended its own use of the term, arguing the term helps differentiate brokers from lenders.
“This expression is defined in RG 206 for the purposes of RG 206 and in order to make a distinction with credit assistance provided by employees and representatives of lenders solely in relation to that lender's own loans,” the ASIC spokesperson said.
“This was done after a public consultation process on the issue of appropriate training standards for such credit advisers. ASIC is comfortable with the use of the term, but if there is evidence of confusion about its meaning, ASIC would consider providing further explanation in RG 206 or adopting another term. ASIC is comfortable that brokers generally understand why there are restrictions on the use of the term 'independent' in describing their services to potential customers because of the potential conflicts associated with receipt of commissions and other benefits.”
