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In a proposal submitted to the Australian Securities and Investments Commission (ASIC), the Finance Brokers Association of Australia (FBAA) urged the regulator to explore a “centralised, independent” professional conduct register.
The association said the proposal aimed not just to keep bad actors from entering the third-party channel but also to “protect the reputation of brokers who operate ethically and professionally, while strengthening confidence in the industry”.
The proposal comes amid calls for greater collaboration across the industry to identify misconduct and prevent fraudulent operators from re-entering the sector.
It also follows heightened scrutiny of mortgage fraud, with a number of high-profile cases and investigations involving the sector.
What is the FBAA proposing?
Under the proposal, a centralised register would provide a national and consistent way for lenders, aggregators and other relevant parties to check the professional conduct history of individual brokers and credit representatives.
The association suggested the register could be managed by an independent credit reporting bureau, such as Equifax or Experian, with access potentially extended to industry associations, regulators and, at an appropriate level, consumers.
However, the FBAA said any model would need safeguards covering verified conduct outcomes, privacy, procedural fairness and the correction of inaccurate information.
The proposal forms part of a white paper submitted to ASIC ahead of an industry roundtable scheduled for 16 November, with the association stressing that it was putting forward an idea for discussion rather than a fully developed solution.
“Every industry has a small number of people who do the wrong thing, and the actions of a few should never damage the reputation of an entire industry,” FBAA CEO Leo Gagic said.
“A centralised register is less about identifying the few who do the wrong thing and more about protecting the thousands of brokers who do the right thing every single day.”
Brokers see merit but warn of risks
Speaking to Broker Daily, brokers broadly welcomed the FBAA’s proposal but said its effectiveness would depend on how the register was implemented.
“I think there is merit in a centralised national conduct register if it strengthens transparency and accountability across the industry, particularly where it gives lenders, aggregators and consumers greater confidence in the brokers they deal with,” said Ashleigh Pakis, director of Panache Financial.
“My concern would be making sure it is fair and balanced. Any register would need clear and consistent standards, proper verification of information, and a genuine right of reply or review so that unsubstantiated complaints or minor issues do not unfairly damage a broker’s reputation.”
Nick Chong, managing director of Rateseeker, said existing systems already provided some safeguards, particularly following the introduction of reference-checking rules after the royal commission. However, he said information remained fragmented.
“At the same time, the information is scattered all over the shop, so it can be hard to get a consistent picture.
“A central register could close that gap, but I’d want to see how it would work in practice before calling it the answer.”
Pankaj Bhandge, senior loan specialist at asset finance brokerage and fintech LoanOptions.ai, said extending the register beyond residential mortgage broking would be particularly important.
“In asset and commercial finance, many brokers aren’t licensed,” he said.
“Some deals are sent directly to the lenders rather than through an aggregator, and the reference-checking framework doesn’t reach them. If the goal is consistent conduct standards across broking, asset finance has the most to gain.”
Concerns over fairness and compliance costs
Bhandge said the potential benefits needed to be weighed against the risk of brokers being unfairly caught up in the system.
“If unproven complaints or commercial disputes end up on a register, you could damage a broker’s livelihood over something that was never misconduct.
“Asset finance has plenty of grey areas: a deal goes bad because a business fails, or a lender and broker part ways over volume rather than conduct.
“The register has to tell those situations apart from genuine wrongdoing.”
He also warned that the register could become another compliance expense for sole operators and smaller brokerages.
Chong similarly warned that without a fair appeals process, the register could undermine its intended purpose of protecting reputable brokers, instead damaging the reputations of those who had not been found to have engaged in misconduct.
“Mud sticks, even after a record is corrected,” he said.
“Where the line sits between serious misconduct and an honest mistake needs to be clear, or brokers may become reluctant to speak up when something goes wrong, which is how the industry learns.
“There’s also the cost and admin burden for smaller businesses, and the privacy and security of sensitive information.”
Success hinges on independence, governance and industry input
All three brokers said the register would need clear rules, independent oversight and safeguards to operate effectively.
“For me, the key to its success would be independence, strong governance, consistent reporting criteria and procedural fairness,” Pakis said.
“Done well, it could lift professional standards and trust across the industry. Done poorly, it risks becoming punitive rather than constructive.”
Chong said the register would need to be based on verified outcomes rather than allegations, with clear criteria for what could be recorded.
“Only verified outcomes should be recorded, not allegations, with clear thresholds for what counts and a simple way for brokers to see and correct their own record.
“Privacy protections would need to be strong, access carefully controlled, and the information useful for consumers without being overwhelming. It also has to be affordable and easy to use, so smaller businesses aren’t priced out.
“Most importantly, the industry, regulators and brokers of all sizes should help design it.”
Bhandge also outlined four requirements, including recording only verified outcomes, giving brokers an opportunity to challenge entries, extending coverage across finance sectors and ensuring independent governance.
“First, it should record only verified outcomes, such as findings from a regulator, a court or AFCA, or a terminated accreditation with documented reasons. Allegations shouldn’t go on it.
“Second, brokers need procedural fairness: they should be told before anything is recorded, be able to respond, and have a quick way to get errors corrected.
“Third, it needs to cover everyone who arranges finance, whether they hold a licence or not and whatever the asset class. Otherwise the problems simply move to the part of the market it doesn’t reach.
“Fourth, it needs independent governance, so it doesn’t turn into a tool lenders or aggregators can use against brokers in commercial disputes.”
Gagic added that the FBAA had put forward “an idea, not a complete solution”.
“We recognise this will take time, but it’s a conversation worth having with ASIC and the wider industry that could provide a robust and sustainable solution.”
[Related: Industry welcomes BID review but defends broker judgement]
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