ASIC’s regulatory guidance on referral fees in financial services distinguishes between referrals for credit products (mortgages) and referrals for financial products (investments, superannuation, insurance advice).
Credit referrals (mortgages). Under the National Consumer Credit Protection Act, making a referral to a licensed broker is not itself a credit activity and does not require an Australian Credit Licence. The referring professional must not provide credit advice — the referral must be a pure introduction. ASIC expects disclosure of the referral arrangement to the consumer.
Financial product referrals. ASIC’s Regulatory Guide 175 addresses referral arrangements between financial advisers and other professionals. Where a referral results in personal advice on a financial product, the FOFA conflicted remuneration provisions apply. If the referral is only to a service provider (a broker, not a financial product), the referral is generally outside the FOFA framework.
Disclosure. ASIC consistently requires that referral arrangements be disclosed to consumers. The disclosure should identify the receiving party, describe the nature of the arrangement, and confirm that a fee or benefit may be received.
Regulatory scrutiny. ASIC has previously scrutinised bank referral programs (such as CBA’s Referral Source Program) that created systemic incentives for bank staff to refer customers to bank-aligned services. The concern was that referral structures could compromise the referring professional’s duty to the client. Independent referral programs, where the broker accesses a wide lender panel, present a lower conflict risk.
