Mortgage business logo

Aggregation boss calls out disclosure concern

A top aggregation executive has stressed the significance of broker disclosure to the industry’s credibility.

It is a well-known fact that some aggregators provide additional incentives to their brokers to sell particular products, Connective principal Mark Haron told Mortgage Business.

“That will be done not necessarily through cash bonuses or commissions from the particular funder, but more from the aggregator reducing or refunding aggregation fees based on the sale of those products,” Mr Haron said.

“That type of behaviour can be done, but it is up to the broker sitting opposite the customer to disclose that conflict of interest,” he said.


Under NCCP brokers are obligated to disclose any conflict of interest, but in recent months the corporate watchdog has questioned the effectiveness of disclosure.

Speaking at the Centre for International Finance and Regulation conference in Sydney in May, ASIC deputy chair Peter Kell said ASIC’s approach over the past 15 years has been “anything goes as long as you disclose”.

“The role of disclosure is an underlying principle in structuring your regulatory requirements and regimes,” Mr Kell said.

“That was central to the [1997] Wallis Inquiry regulatory philosophy and is central to ASIC’s powers,” he explains.

“The approach we have had over the last 15 years has been ‘anything goes as long as you disclose’, that you can issue any sort of product out there – which has certainly enabled a wide range of choice – and you can have any sort of remuneration structure with conflicts of interest imbedded in it, as long as you disclose,” said Mr Kell.

“ASIC would make the case that conflicts of interest, especially in retail markets, are not particularly well addressed by disclosure and it’s time to rethink that philosophy,” he said.

“We have had a situation where too often disclosure has been the answer but we have forgotten the question.”

The regulator is increasingly looking at areas where disclosure does not address market issues, Mr Kell added.

“We are looking into areas where disclosure is not addressing the market failure, not improving market outcomes, but all it is doing is imposing costs on those that have to produce the disclosure documents,” he said.

Connective boss Mark Haron believes disclosure of conflicted interests are the biggest challenge for the mortgage broking industry.

“If brokers don’t disclose effectively and people feel that they have been sold a product because a broker was biased because of a bonus or some special arrangement, then as an industry we are seen to be less reliable, and potentially down the track we could have consumer groups and the regulator saying they can’t trust brokers with commissions because they don’t disclose them effectively, and we could end up going down a similar past as the financial planning industry with FOFA,” he said.

Share this article
brokerpulse logo


Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

brokerpulse graph

What are the main barriers to securing a mortgage at the moment?