The misunderstandings of mortgage broking together with the actions of a few bad eggs have once again caused the third-party distribution industry grief.

An article published by Fairfax last month claimed that mortgage brokers are demanding commissions from developers and builders of up to 8 per cent for convincing clients to buy investment properties.

When The Adviser brought the article to the industry’s attention, it prompted a lot of discussion and many comments from brokers fed up with being lumped in with crooked operators.

As a genuine player in this industry, I know that the vast majority of us are professional operators, who strive to do the very best for our clients.

Unfortunately, despite the implementation of the National Consumer Credit Protection Act 2009, there are still rogue operators within this industry, whose actions reflect badly on the rest of us.

And, a real misunderstanding of our industry within mainstream media doesn’t help our cause.

Undisclosed, sizeable kickbacks on investment property sales do remain an ongoing problem, but there are ways that brokers can distinguish themselves from these dubious operators.

First and foremost, it’s all about disclosure. If you’re getting a commission on recommending anything, you’ve got to disclose it to clients. Fully and clearly.

It’s not enough to have a commission disclosure in very small print, within the thick of a 10-page document. If you receive commissions, you want your client to be completely aware of any commission arrangements, because finding out later could leave a very bad taste in their mouth – which is just asking for trouble really.

Secondly, but equally importantly, distance yourself from the developer. If you don’t know much about the properties and you’re not comfortable promoting them as a good investment, don’t!

You can offer your clients an opportunity worth looking into, but be clear with your clients that you aren’t actually recommending the property to them.

Thirdly, ask yourself what you know about the developer and do you have reason to trust them? If you’re going to refer clients to any developer or builder, is it because you genuinely have faith that they are offering a good product, or are you only doing it for the financial kickback?

It might seem harmless but you’ve got to ask yourself this: is the short-term financial gain of a property commission worth the potential long-term consequences of a distraught client?

Upsetting your client not only ruins the potential for developing a long-term, multi-transactional relationship, but it could be disastrous for your reputation, if the bad news spreads.

So I’ve said this before, and I’ll say it again: be picky with your partners. Your reputation is everything.

And finally, if you really want to differentiate yourselves from unscrupulous property spruikers, I urge you to consider joining Property Investment Professionals of Australia (PIPA).

PIPA is steadfast in its stance against property spruiking and undisclosed commissions and a membership with us is a clear message to customers that you are too.


Ben Kingsley, chair, Property Investment Professionals of Australia (PIPA)
Ben Kingsley small

Ben Kingsley is chair of the Property Investment Professionals of Australia (PIPA) and founding director of wealth advisory business Empower Wealth.

A qualified property investment advisor, Ben holds a real estate agency license, a certificate IV in mortgage lending and a Diploma of Business, and is one of Australia’s leading property investment analysts and advisers.

PIPA is a not-for-profit association established by industry practitioners with the objective of representing and raising the professional standards of all operators involved within property investment.

As the chair of PIPA, Ben is at the forefront of the property industry and is a passionate advocate of ethical, professional property investment services.

Ben is a regular media contributor, appearing often as a panellist and commentator on Sky Business News’Your Money, Your Call and Melbourne Property TV. He also contributes regularly to various print and online publications including Smart Property Investment magazine.

5 Juner 2014
The Adviser
http://www.theadviser.com.au/blog/30325-sick-of-being-labelled-dodgy