Aggregation group Finsure has strengthened its entry requirements in what it says is an increase in misconduct in the broker space.
Simon Bednar, CEO of major aggregation group Finsure, has warned that misconduct appears to be rising in broking and has brought in new requirements to lift compliance.
The updates come as Australia’s mortgage broking industry continues to grow at pace. There are said to be around 22,000 active brokers in Australia, with the profession attracting members of the financial services industry and beyond. This is partly due to the fact that the broker channel is so successful (with around 78 per cent of all mortgages written by brokers) and the attraction of uncapped earning potential and flexibility.
However, Finsure CEO Bednar has warned that questions are emerging around whether rapid expansion – particularly among new-to-industry brokers – is creating unintended risks for consumers and lenders alike.
While the aggregator noted that the broking industry has made concerted efforts to raise standards and is “no longer a transactional industry” (noting efforts made by the Mortgage & Finance Association of Australia [MFAA] to uplift industry standards through its education pathways and ongoing continuing professional development), he said that “it is still possible for someone to attain the qualifications required to write a loan in a matter of days”.
“That raises important questions about preparedness, experience and long-term professionalism,” Bednar said.
According to CEO Bednar, the barriers to entry for broking may be too low, with new-to-industry brokers, in particular, allegedly being more likely to engage in misconduct.
He said: “While many new entrants build successful, ethical businesses, Finsure has observed an over-representation of misconduct within a small segment of the new-to-industry cohort.
“We have unfortunately seen examples of phoenix-ing, lazy compliance practices and brokers cutting corners. It is a minority, but it is a pattern we cannot ignore. When standards slip, it impacts consumer trust and damages the reputation of the entire industry.
“This poor behaviour is not confined exclusively to new brokers, but early-stage operators without adequate grounding in financial services are more vulnerable to making poor decisions.
“When someone enters the industry without meaningful prior experience, they can underestimate the complexity and responsibility that comes with writing loans. That is where risk can emerge.”
In response, Finsure has introduced additional requirements designed to strengthen broker capability.
It has “made a conscious decision” to lift its entry standards and now requires all new members to have a minimum of two years’ experience in loan assessment or direct customer conversations that assess credit requirements.
If they don’t, these brokers must complete Finsure’s Academy program, or they won’t be accepted by Finsure.
Bednar commented: “The success of this approach is evidenced by our Banker-to-Broker program, where we have seen experienced financial workers make the transition to broking, and operating in a structured, professional manner.”
Finsure has also strengthened its mentoring framework to ensure the right support is in place.
“Our mentors undergo their own formal training and operate within a stringent framework developed by our compliance team. Mentorship isn’t just a tick-a-box exercise – it’s structured, accountable and outcomes-driven,” the CEO said.
Finsure is also now rolling out a proprietary AI-driven monitoring tool, Sentinel, to help it identify any “potentially nefarious activity” within its broker network.
“Rather than waiting for problems to surface, we can detect anomalies and behavioural patterns early,” Bednar said.
“Importantly, it helps our Compliance Team quickly identify corporate relationships which were previously obscure. The tool enhances oversight and strengthens collaboration with lenders.
“Our responsibility is to consumers, to lenders and to the broader industry. Technology like Sentinel gives us greater visibility and allows us to act swiftly if standards are not being met.
“Finsure is proud to take a leadership position in lifting standards. We are proud of the calibre of brokers within our network. Professionalism is not optional – it is foundational.”
The warning comes as the financial services regulator conducts a review of compliance with the best interests duty.
Brought into being in 2021, following the banking royal commission, the duty requires brokers to act in the best interests of their clients when writing consumer loans and to ensure any recommendations are well-documented.
The Australian Securities & Investments Commission (ASIC) is currently analysing extensive data from broker files and conduct records to assess industry compliance with the best interests duty (BID) for the first time since 2021.
This review focuses on the quality of product recommendations, robust record-keeping – especially when brokers do not choose the lowest-cost loan – and the effectiveness of aggregator supervision and complaint-handling systems.
While the primary goal is to establish industry benchmarks and share “better practices”, ASIC has warned that significant findings of misconduct could trigger formal enforcement actions.
[Related: ASIC reveals BID review’s next steps and findings]
