Planners set to launch mortgage broking push
There is likely to be an increase in the number of Financial Planning Association (FPA) licensee members who provide mortgage broking services from the current level of around 35 per cent due to changes to the National Credit Consumer Protection Act introduced on 1 January, 2011.
Around 20 per cent of the Mortgage and Finance Association of Australia’s (MFAA’s) members currently specialise in financial planning.
Although the crossover had been present for some years, the trend is likely to grow in the near future, according to the chief executive of the MFAA, Phil Naylor, and the FPA general manager of policy and government relations, Dante de Gori.
“The fact that they’re both covered and enforced by [the Australian Securities and Investments Commission] will probably help to make the crossover easier,” Naylor said. “There will still be issues, but it makes it easier when brokers work under the nationally regulated law.”
De Gori said more than half of the small licensee members of the FPA either already have a credit licence or intend to acquire one.
Just like financial planners, mortgage brokers are now required to hold a credit licence or represent a licensee in order to operate a mortgage broking business. The two professions are now also subject to similar disclosure requirements.
However, brokers will still be allowed by law to accept commissions from lenders which, according to de Gori, presents an opportunity for financial planners to diversify their revenue streams in the lead up to the commissions ban on investment products.
“If you think about it, especially with the [Future of Financial Advice] reforms happening and the fact that people need to look at other sorts of revenue for their business, it’s quite logical that in the long term more of our members will become licensed to provide credit advice, including mortgage broking,” de Gori said.
Financial planning practice WealthSure is currently looking at acquiring a credit licence and providing mortgage broking services — something it has previously outsourced to
companies that are not aligned with the practice.
WealthSure managing director Darren Pawski said his team waited for the national legislation to come into effect after the New Year to start planning the expansion of their services.
“[If we had done it] when it was unregulated, it [would be] fair to say that the advice market wouldn’t be viewed as consistent; it now has to be under these new provisions,” Pawski said.
Both Naylor and de Gori downplayed notions that commissions were the sole reason for financial planners acquiring credit licences, highlighting the fact that many practices intended to become one-stop shops for clients by providing mortgage and stockbroking services, accounting and financial planning.
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