Connective has flagged that the nature of complaints being made against mortgage and finance brokers is changing.
The complaints that brokers have to deal with are becoming more complex, less predictable, and “very costly” to resolve, Connective has warned.
The major aggregator warned that mortgage and finance brokers, while representing only a small share of overall complaints made to the Australian Financial Complaints Authority (AFCA), are being impacted by a noticeable shift in the type and complexity of issues being raised.
The wholesale aggregator’s compliance team revealed that complaints are no longer confined to more straightforward issues like fixed-rate break costs or administrative errors.
Instead, they are increasingly linked to consumer awareness, economic pressures, and broader interpretations of broker responsibilities – from best interests duty disputes to issues arising out of referrals and commercial client arrangements.
The changes come as the frequency of financial complaints is increasing across the board, with complaints across Australia’s financial services sector remaining at elevated levels.
In July, AFCA bemoaned the “unacceptably high” number of financial complaints for the year ending June 2025, after it exceeded 100,000 for the second year in a row.
Speaking of the issue, Daniel Oh, group legal counsel at Connective, said the shifting landscape highlights the need for brokers to treat compliance as a key part of their business.
“The rise in complaint volumes is often not a reflection of brokers providing poorer service,” Oh said.
“Instead, consumers are more willing to escalate issues, often going straight to AFCA rather than their broker, and AFCA itself is engaging earlier in the process.
“The result is that complaints are more complex, less predictable and sometimes very costly for brokers to resolve.”
Connective’s compliance team outlined several areas where brokers can strengthen their risk management, including accurate record keeping of conversations and decisions.
The need to scrutinise documents carefully and document verification processes was also flagged as a priority.
Being explicit with clients about what brokers can and cannot do, especially around linking offset accounts and post-settlement account management, can also help strengthen risk management, according to Connective.
“No broker expects to face a complaint or lender review, but the reality is these events can be stressful, costly and time-consuming. By tightening processes and keeping thorough records, brokers give themselves the best possible protection and peace of mind,” Oh added.
Earlier this month, not-for-profit association representing property investors, the Property Investors Council of Australia (PICA), wrote to several professional bodies suggesting there was a “concerning resurgence of speculative marketing, conflicted conduct, and unlicensed financial advice emerging in the property investment space”.
The letter largely focused on buyer’s agents, but also suggested that a growing number of mortgage brokers were using “speculative marketing” and opening themselves up to conflicted conduct and potential unlicensed financial advice.
[Related: AFCA complaints top 100k for second consecutive year]
