'Cowboy' mortgage brokers threat to SMSF sector
Self-managed superannuation fund (SMSF) trustees are at risk of “cowboys” in the mortgage broking industry recommending products without sufficient qualifications, says an SMSF specialist.
“The biggest risk in the SMSF space at the moment is the mortgage broking fraternity thinking they’re financial planners and going ahead and providing product advice,” he said.
“I have seen some dangerous activity first hand and some of these brokers try to either avoid the financial planners or get the planners to sign off on a form without a client actually going through the advice process with a planner.”
Power, who is an SMSF specialist adviser at CXC Financial Partners in Sydney, says he was not aware of the influx of mortgage brokers in the industry before he began mortgage broking himself 18 months ago.
In many cases, the mortgage brokers operating in the SMSF sector are not qualified to do so, he said.
“There’s a real push coming from the [mortgage broking] industry that there are huge loan opportunities in self-managed super and subsequent property investment, and this can lead to terrible advice because they don’t know what they’re doing,” he said.
Power called on regulators to introduce higher educational requirements for mortgage brokers providing product advice, akin to the RG146 qualification for financial advisers.
While there is broad convergence between the mortgage broking and planning industries, he said this is “particularly dangerous when it comes to SMSFs due to the intricacies that can arise”.