The Murray Inquiry has recommended that mortgage brokers be required to disclose when they are owned by a bank.
The Financial Systems Inquiry issued its final report on Sunday, and in it the inquiry has called for new disclosure requirements for brokers and advisers. The FSI claimed consumers are often unaware of ownership structures of mortgage brokerages and financial advice firms.
"Often consumers do not understand their financial adviser's or mortgage broker's association with product issuers. The association might limit the product range an adviser or broker can recommend from," the Inquiry said.
The FSI claimed a recent survey of consumers found that 55% of consumers receiving financial advice from an entity owned by a large financial institution but operating under a different brand name were under the impression the entity was independent.
"The Inquiry believes greater transparency regarding the nature of advice and the ownership of advisers would help to build confidence and trust in the financial advice sector," the final report said.
While the FSI noted that there is little evidence of differences in the quality of advice from independent firms versus vertically integrated firms, it said there was value to consumers in making ownership structures more transparent.
