Mortgage broking regulation to follow financial planning's lead
Mortgage broking regulation may soon mirror the regulation of financial planning, according to the head of dealer group Ballast, Frank Paratore.
With the Australian Securities and Investments Commission (ASIC) in control, we believe mortgage broking regulation will go down the same path as financial planning, Paratore said.
Similar to the Australian Financial Services Licence, mortgage brokers are “going to have to operate under a licence type scenario [in] Australia, and for those brokers who don’t or who can’t achieve a licence, they’re going to have to operate as an authorised representative,” Paratore said.
That means, “as per financial planning, the level of risk lies with the person who holds the licence”.
Paratore believes this will cause a “shake out” of the industry, resulting in the loss of 30 to 40 per cent of the current brokers in the market.
Paratore said Western Australia is currently the only state that requires brokers to have a licence, and he supported a need for a greater level of regulation nationally in the mortgage broking industry.
“The level of entry has been pretty minimal,” he said.
Paratore also believes it is likely that the broking industry will adopt the processes of fact finding and preparing Statements of Advice in a manner similar to the operations of a financial planner.
“You’re going to need to do your due diligence … first off in the piece to actually understand what it is the customer is wanting and allow the customer to select and make choices,” Paratore said.
Recommended for you
Net cash flow on AMP’s platforms saw a substantial jump in the last quarter to $740 million, while its new digital advice offering boosted flows to superannuation and investment.
Insignia Financial has provided an update on the status of its private equity bidders as an initial six-week due diligence period comes to an end.
A judge has detailed how individuals lent as much as $1.1 million each to former financial adviser Anthony Del Vecchio, only learning when they contacted his employer that nothing had ever been invested.
Having rejected the possibility of an IPO, Mason Stevens’ CEO details why the wealth platform went down the PE route and how it intends to accelerate its growth ambitions in financial advice.
