The debate in New Zealand was prompted by Mortgage Link’s decision to drop the claim from its advertising.
Mortgage Industry Association of Australia (MIAA) chief executive Phil Naylor says that following Australian Securities and Investments Commission (ASIC) investigation into misleading advertising by a couple of broking firms, his association has drawn up draft advertising guidelines.
The idea is to self-regulate before regulations are imposed on mortgage brokers.
Once ASIC has approved the guidelines, they will be distributed to all MIAA members.
The two companies involved in the ASIC investigations Fintrack and Express Home Loans, had been making misleading claims, including that they weren’t influenced by the commissions they received as to which loans they recommended because they were receiving the same commissions from all lenders. They weren’t. Another claim was that they represented 40 lenders when the actual number was somewhat less.
While these particular claims weren’t factually correct, there is still a lot of confusion in the broking industry as to what claims could be made legitimately and which couldn’t, Naylor says.
"You’ve got to be careful about saying things that might mislead people, even though you don’t think you’re misleading when you make a claim," he says.
And the claim to offer a "free" service definitely falls into that category in his view.
"’Free’ is one of the areas that might be dubious. Even though the customer’s not paying the broker for any service, whether it’s free in a wider sense is a moot point," Naylor says.
Other problem areas, given that brokers in both Australia and New Zealand are remunerated by the lenders, are claims to provide "objective" advice or "independent" advice, he says.
