Brokers should be careful before branding themselves as advisers, and ensure the term accurately reflects their business model, ASIC has stated.

Outsource Financial CEO Tanya Sale previously told Australian BrokerNews that mortgage brokers could draw undue scrutiny from ASIC if they chose to label themselves advisers.

ASIC has now told Australian BrokerNews that mortgage brokers who decide to use the term should be "very careful" that the label does not mislead consumers as to the services brokers offer.

"There is nothing in the [NCCP] stopping a person who engages in credit assistance (assisting and/or suggesting a consumer in relation to a particular credit product) calling themselves an adviser, but they would have to be very careful to ensure that they were not holding themselves out to be an adviser in a way that implies they are able to advise on financial products such as investment products (shares and MISs) or insurance," an ASIC spokesman said.

Ultimately, the decision whether or not brokers choose to call themselves advisers will be based upon whether or not it accurately describes the service they provide, Gadens Lawyers senior partner Jon Denovan said.

"Whether brokers should call themselves 'advisers' depends on their business model. Some do provide advice, whereas as others provide assistance to obtain a home loan without really giving much advice along the way," Denovan commented.

Moreover, brokers who offer only a small range of options to consumers should steer clear of the term, Denovan said.

"Certainly a broker offering a single funder's products or a limited range of products should never use the word," he remarked.

Denovan conceded that the term did bring with it a certain amount of risk, and said that courts and EDR schemes could interpret the role as providing a higher duty of care. However, Denovan downplayed any perils inherent in brokers applying the title to their role.

"At the end of the day, it's not a big deal," he said.

Source: Broker News