Yes, financial planners can refer clients to mortgage brokers and receive a referral fee, provided the arrangement is properly structured and disclosed.
The critical distinction is between a referral and financial product advice. Referring a client to a licensed broker for credit products is generally not considered financial product advice under the Corporations Act, which means it does not typically trigger conflicted remuneration provisions or FOFA requirements that apply to advice fees on financial products.
AFSL licensee approval. Financial planners who hold their own AFSL or operate under a dealer group must review their licensee’s policy on referral income from non-AFSL services. Most licensees permit broker referral arrangements with appropriate disclosure and written agreement.
Client disclosure. The financial planner should disclose the referral arrangement and fee to the client, consistent with their best interests duty and General Advice obligations.
Fee-for-service vs referral fee. In a fee-for-service planning practice, receiving a referral fee from a third party requires careful management to avoid perception of conflicts. Transparent disclosure and the ability to demonstrate the referral was made in the client’s best interests is essential.
In an integrated wealth and property strategy, referring clients to a mortgage broker who accesses 70+ lenders provides a tangibly better outcome than sending the client directly to a single bank — which supports the best interests rationale for the referral.
