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Both peak bodies for the national mortgage broking industry welcome recent franchising transparency requirements, they have said.
With many mortgage broker professionals plying their trade as part of a greater franchised aggregator network, both the Mortgage and Finance Association of Australia (MFAA) and the Finance Brokers Association of Australia (FBAA) have endorsed a recent federal government franchising transparency drive.
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With the aim of “improving transparency of the franchise sector”, the Australian government — Treasury — is supporting Australians who are considering entering into a franchise agreement by making relevant information available through the Franchise Disclosure Register (FDR), it has announced.
Since Tuesday (15 November), the FDR has provided free access to a directory of franchised systems available in Australia.
The register is available to the public and “anyone can search, view and compare important information about franchises”, such as establishment and ongoing costs and contract terms, according to the Treasury.
Minister for Small Business The Honourable Julie Collins MP said the register also supports franchisors by providing a portal allowing them to “demonstrate their commitment to transparency” to potential franchisees.
“The register is another tool to help prospective franchise buyers undertake their due diligence, along with seeking professional advice and conducting detailed research,” Ms Collins said.
The government confirmed it is committed to an effective regulatory framework for the franchising sector to help address “current information gaps” and “support due diligence activities” for those considering entering into a franchise.
After 12 months, the government will consider the ongoing effectiveness of the register, including through a statutory review, it explained.
Levelling the playing field
In response to the register opening, MFAA head of policy and legal, Naveen Ahluwalia, told The Adviser: “Many of our members operate as small business franchisees. The Franchise Disclosure Register is in line with both the Franchise Code and the introduction of legislation to ban unfair contract terms for small businesses.
“These reforms will help level the playing field across the franchising sector and, if implemented in an efficient way, the register will promote greater transparency and protections for our small business franchise members.”
Delivering nothing but best practice
FBAA managing director Peter White commented to The Adviser: “Transparency within the franchises operating in the mortgage broking sector are nothing less than best practice.
“Many who run such models — like Loan Market and Mortgage Choice and Aussie and RAMS Home Loans etc — have accolades and some with awards for the high level of professionalism and compliance in the manner in which they operate.
“We know, in general, the transparency through the Best Interests Duty has shown how all brokers, including those in franchise models, are delivering nothing but the best to their customers.
“And the number of complaints with AFCA, our ombudsman, are so low I can’t even get it to rank on a chart (it’s around 0.3 per cent of all claims lodged).
“So we embrace transparency, as that discloses the truth — and that in turn engenders ‘trust’ — [which is] the goal we want as trusted assistants to borrowers.”
Further information about the register can be accessed via www.business.gov.au/franchising
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