Recently we issued a pro forma finance broking contract for WA.
These FBC have been further updated since that newsletter. If you are working off the previous version, we recommend changing to the attached version, which can be viewed by clicking here. To view the mark up version, showing the changes from the version released on 24 April 2007 click here.
The difference relates to the deletion of the sentence in paragraph 5 of page 2 which read as follows: "We are an independent finance broker and we have no direct or indirect interest in any other transaction which could affect the services we provide you."
This deletion is to avoid the use of the word "independent". Regular Gadens Update readers will recall we wrote last year about the "naughty words". That Update noted that s923A of the Corporations Act restricts the use of the words independent, impartial or unbiased. Generally these words must never be used where an intermediary receives a commission.
Although that section of the Corporations Act only applies when a person is carrying on a financial services business, the fact that this legislation targets intermediaries remunerated by commission sends a very loud and strong warning to the finance broking industry.
It can be strongly argued that it is improper and misleading for a broker to claim to be independent, impartial or unbiased if a broker is being paid commission by lenders. This is because the payment of the commission is likely to affect the independence of the broker.
A further argument is that a broker cannot be seen to be independent if the broker has only a limited panel of lenders. Arguably, everyone has a limited panel because it is virtually impossible to be on a panel of every lender.
t (02) 9931 4927
t (02) 9931 4778
t (08) 9223 9248
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).