Financial Advisers & Mortgage Brokers – should they have to abide by the same standards & rules? (Joel Ronchi comments for Professional Planner Article)

Professional Planner Article:


If a Mortgage Broker and Financial Adviser are working together for a client, each needs to be confident the other is operating to the same high standards, not only those required at law (NCCP Act and Corps Act) but also above and beyond the law at a “professional and ethical level”.

I strongly believe that Mortgage Brokers should be required to adhere to a similar set of standards as those implemented and enforced under the FASEA Standards. 

The fact of the matter is the FASEA Code of Ethics is seen and felt by the industry to have “real teeth” in being able to challenge Advisers who do not break the law, but conduct themselves in an unethical and unprofessional manner.

Could it be as simple as amending the NCCP Act to include an equivalent s921E from the Corps Act and then have an amended Mortgage Broker version of the FASEA Code of Ethics?  Such a Code requires the Professional to act in the best interests of the client and appropriate to the client’s individual circumstances.  In such an environment it would not matter if a Financial Adviser is project managing the needs of a client and brings in a Mortgage Broker, as the Adviser could then be confident the Broker must adhere to the same high professional standards as the Adviser does.  

I would prefer that a similar Code of Ethics/Conduct be established for Mortgage Brokers, as a legal requirement under the NCCP Act, rather than the FASEA Code of Ethics (as it currently exists) being applied to Mortgage Brokers when they are brought in to a client relationship by a Financial Advisers.  Consistency and clarity is required for Mortgage Brokers to understand any increased obligations, and this can only be achieved through a Code of Ethics/Conducts specifically for Brokers and there necessary training around how such a Code applies being undertaken.    In reading the Standards of the current FASEA Code of Ethics, each is easily transferable to the duties of the Mortgage Broker (assuming an allowance for wording in Standard 7 about the Corps Act, as well as consideration of the “fair and reasonable” concepts regarding commissions/fees received by the Broker and “value for money for the client”).  There would also need to be significant clarity provided to Brokers around the wording of Standard 3.

I have seen firsthand the positive impact the broader FASEA Standards are having on the financial planning industry, and the Code of Ethics has created a real focus on how Financial Advisers are to “behave” in a professional sense.  The challenge with the FASEA Code of Ethics at the moment, arguably, is that FASEA have not provided enough guidance and “real world” direction to better assist Advisers in understanding the expectations around the Code. 

I definitely think there is a much broader and deeper discussion that needs to be had with regards to Mortgage Brokers, much in a similar way it was and continues to be done with Financial Advisers.  The idea is not to make anyone’s life more onerous, but rather to ensure consistency of standards across Professionals that clients engage, especially when poor advice can have such an adverse effect on an individual’s life. 

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