By: Belinda Luc
While it seems the introduction of national credit licensing won’t push brokers to diversify their product offering, it will create opportunities for diversification.
Connective principal Mark Haron told The Adviser that the new legislation will create a “natural segway” for brokers to ask questions about a customer’s financial situation.
“The responsible lending requirements under the national credit legislation will impose on brokers a duty to ask more questions about their clients’ financial situation to assess their credit worthiness,” Mr Haron said.
“This will mean that good referral partnerships will become increasingly valuable to brokers, particularly with the financial services industry.”
“Those brokers who do not wish to refer clients may instead look to offering diversified products themselves,” he said.
But while Mark Haron remains confident that legislation will encourage brokers to provide a more wholesome service in terms of meeting client's overall needs, he said that licensing will not in itself be a major catalyst for business diversification, and many brokers would agree.
According The Adviser’s recent weekly straw poll, the majority of respondents (49.8 per cent) said licensing would not encourage them to diversify their product offering.
That said, 43.6 per cent of the 241 respondents said licensing would impact a broker’s product offering, while 6.6 per cent were unsure whether or not it would have any impact.
Southshore Finance director Mike Coombes said with the introduction of licensing it will be business as usual for brokers.
“I don’t think licensing will impact a broker’s product offering. They won’t be thinking about diversification when they’ll have so many other things to think about in terms of compliance and other requirements under the credit legislation,” Mr Coombes told The Adviser.
“If a broker was thinking about diversifying into other financial products, like insurance, they’d still need to apply for an Australian Financial Services Licence – that requirement hasn’t changed,” he said.
And Niche Lending director Moshe Moses agreed. “I don’t believe there is a direct correlation between licensing and a broker thinking about diversifying his or her product offering,” he said.
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