INDEPENDENT ~ UNBIASED ~ PRO CONSUMER
Independent -
The Legal Definition
It took a long time but thankfully since March 2013 the terms "independent", "impartial" and "unbiased" have been protected by Federal Legislation.  Before then almost every mortgage broker in Australia claimed to be independent in some way shape or form. 
 
To be independent, impartial, or unbiased a mortgage broker:
 
a.  Must not receive commissions (unless rebated in full to their Clients);
 
b.  Must not receive any other gifts or benefits from a Lender that could be reasonably expected to influence the Broker;
 
c.  Must operate free from direct or indirect restrictions on product selection;
 
d.  Must operate without any conflicts of interest arising from their association or relationship with Lenders.
 
Additionally, the above points apply to the mortgage broker’s Credit Licensee and Employer.
 
So - it should be fairly obvious that if your Mortgage Broker is not independent it means that:
 
  1. They are suffering from an unresolvable conflict of interest; and
     
  2. They cannot possibly be acting solely in your best interests.
Truly Independent Home Loan Advice – Higher Standards
While legislation has finally arisen to stop obviously conflicted mortgage brokers from claiming to give unbiased home loan advice, there will always be those companies that are “too smart by half” and that like to “play hopscotch” with the line drawn by legislators and the Regulator (ASIC) rather than getting on with the, admittedly much harder, job of providing truly independent mortgage advice.

The financial advice industry has been grappling with false claims of truly independent advice for about a decade longer than the mortgage advice industry (chiefly because financial planners have been licensed for about a decade longer than mortgage brokers).
 
Frustrated by similar misleading claims of independence in the financial advice industry a professional body has emerged that exists solely to promote truly independent financial advice.  That body is the Independent Financial Advisers Association of Australia (IFAAA),

They refer to truly independent financial advisers as meeting the “Gold Standard of Independence”.

That standard has three criteria:[1]

1.   No ownership links or affiliations with product manufacturers. Impartiality is impossible where an adviser has links to a product manufacturer. Ownership links create an environment where the adviser resembles, at best, a well-intentioned salesperson.

2.   No commissions or incentive payments from product manufacturers. Commissions are payments made by product manufacturers to their distribution network. They create a conflict of interest between advisers and their clients.

3.   No asset-based fees.  Asset fees, although they are authorised by the client, are calculated precisely the same way a commission is calculated. Asset fees are incentives that prevent an adviser from being impartial and therefore create a conflict of interest between adviser and client.

It is easy to relate the first two criteria to the requirements of the legislation – in our case s160B of the NCCP Act.  However, the third criterion holds truly independent advisers to a higher standard.

The third criterion means that if a mortgage broker, who otherwise claims to be independent, charges a fee that is based on the size of your home loan then they are still conflicted and cannot give impartial or unbiased mortgage advice.  Whether they keep the Lender’s commission or create their own commission-like fee – the conflict of interest remains.

Only where a fee is based on the work undertaken (e.g. like your Doctor, Lawyer, Accountant and other professional advisers) can you be sure that you are receiving advice that is free from conflict. 

Likewise, it is easy to see that ‘success-based’ fees create conflict by forcing the mortgage broker to get you a result at all costs and regardless of what is in your best interests.

Independent Mortgage Planners is the first and only mortgage broker that holds itself to parallel standards of truly independent, impartial and unbiased home loan advice.  This is despite some clearly misleading claims by other organisations.

We are Associate Members of the IFAAA but we actually go a couple of steps further than the IFAAA Gold Standard.[2]  In addition to the three criteria above we also hold ourselves to the following:

4.   No income from commission (or commission-like payments) for other products or services.  Many mortgage brokers receive commissions, or similar introduction incentives, for a range of ‘referrals’ for insurances, superannuation, financial advice, investment properties etc.  By “playing hopscotch” with the lines between the NCCP Act and the ASIC Act – and the largely unregulated area of “property spruiking”; a mortgage broker can claim to be independent under the NCCP Act and still receive fat commissions for ‘introducing’ your business for other products and services.  And most Brokers' Licensees and Aggregators consistently encourage them to diversify their income streams into other areas.

5.   No referrals to other advisers unless they also meet (at least) the IFAAA Gold Standard.  We choose not to refer to other entities unless they uphold the same ethics as we do, regardless of the fact that (by refusing commissions or referral payments) we ourselves would not be conflicted by such introductions.

Don't be misguided by the marketing hype - ask your Mortgage Broker if they're truly independent - AND GET IT IN WRITING!


[2] Unfortunately, at this stage there is no parallel association to the IFAAA in the mortgage broking industry.  Even if there was, it would currently be an association of only one company (us) - which is why we've chosen to be Associate Members of the IFAAA (they don't have a Practising Member category for Mortgage Brokers for obvious reasons.
Pro Consumer
As Australia's only truly independent mortgage broker we act in your best interests and work on your behalf.  
 
While others pay lip service to this concept and many are little more than salespeople for the Banks - we focus on your unique circumstances, goals and objectives. 
 
The analysis we undertake on your behalf in selecting your home loan goes well beyond what other mortgage brokers do. 
 
In fact, our industry makes sure that mortgage brokers don't have access to the tools, knowledge, training, or information systems to be able to act in your best interests.  This is why we've had to develop our own proprietary systems and processes.  We are truly different by design.
 
To learn more about the significant financial benefits of a pro consumer approach to mortgage advice please review other Pages from the "Learn More" drop-down menu.