A key measure of professionalism is clarity and fairness when dealing with clients and ensuring no conflicts of interest.  It is now almost 6 years since CAFBA’s Professional Standards were agreed by members.  Since then, these Standards have applied to both Voting and Associate Members, with annual membership renewal contingent on self-declaration of compliance.

These Standards do not mandate members provide clients with a broking services contract, leaving it to members to assess the circumstances in which that would be appropriate.

However, continuing developments are suggesting members consider whether there is merit in documenting expectations and dealings with clients.  Recent changes to the NSW Fair Trading Act discussed in the CAFBA Bulletins last month and this month are reinforcing this.  This is a continuum of laws addressing secret commissions, unfair contract terms, fair and transparent dealings, and prohibitions on engaging in misleading or deceptive conduct.

A compelling reason for documenting a contract is commercial risk management, establishing clear expectations about service delivery and costs and how any concerns will be managed whether internally or, as a condition of CAFBA membership, through the independent Australian Financial Complaints Authority. 

Of course, documenting a contract does not necessitate clients signing a paper document, with most commercial dealings increasingly being able to be achieved by several means such as the client giving verbal or electronic consent to the disclosed services and costs.  Clients confidence in a member’s broking services can be further supported by online information and disclosures.

CAFBA suggests members give serious consideration to their business having clear and transparent information about their services, how they are remunerated and the expectations of all parties.  Key elements can include –

1. simple and clear language, reflecting the commercial nature of broking services

2. the purpose and duration of a proposed engagement

3. the nature and scope of services

4. the fees, if any, for those services and when payable

5. arrangements in place with third parties for payments which may be received from, or paid to, third parties for the services to be provided to a client – addressing conflicts of interest, secret commission laws and recent NSW Fair Trading Act requirements

6. respective rights and obligations can be reinforced in a contract, covering indemnities, termination rights, confidentiality, privacy etc – consistent with unfair contract terms laws

Adoption of this suggestion has the potential to enhance the professionalism of CAFBA members for both potential and established clients.  Members should ensure it reflects their business model, whether commercial or consumer or both, as not all broker businesses are the same, and seek legal advice, where necessary, on compliance with the various laws that impact on broking obligations and business.