Can a Mortgage Broker Refer Clients to Credit Repair?

The Two Obligations That Apply

1. The best interests duty (BID)

Under the National Consumer Credit Protection Act, a mortgage broker must act in the best interests of the consumer when giving credit assistance. ASIC's guidance (Regulatory Guide 273) sets out how it's assessed, and two points matter most for referrals. First, where the broker knows or ought to know of a conflict between the client's interests and the broker's own, the broker must give priority to the client's interests. Second — and this trips people up — a broker cannot contract out of the duty. You can't satisfy it with a signed disclosure, a consent form, or any scheme; attempting to do so engages the anti-avoidance provisions of the NCCP and can carry a civil penalty.

What this means for a credit repair referral: the test is whether the referral genuinely serves the client. Sending a client to correct a default that was listed in breach of the credit reporting rules — so they can then access suitable, lower-cost credit — is the kind of step that supports the client's interests. Referring purely to generate a side benefit for yourself is the kind of thing the duty is designed to catch.

2. The ban on conflicted remuneration

Separately, since January 2021 there is a ban on conflicted remuneration for mortgage brokers — broadly, any monetary or non-monetary benefit given to a broker that could reasonably be expected to influence the credit assistance they provide. The ban exists to stop payments quietly steering the loan recommendation.

This is the part brokers most need their own advice on. A referral fee paid by a third party is not automatically “conflicted remuneration” in every context — but whether a benefit is caught depends on whether it could reasonably be expected to influence the credit services (the loan recommendation) the broker provides. That's a fact-specific judgement about your particular arrangement, and it's exactly the kind of question to put to your licensee, aggregator or compliance adviser rather than to a credit repair company.

What a Defensible Referral Tends to Look Like

We can't tell you how to meet your obligations — that's your licensee's and your own responsibility — but brokers who've thought this through tend to share some common features. They refer because the client has a genuine, identifiable issue on file, not as a reflex. They keep the client's interests front and centre and document why the referral helps the client. They're transparent with the client about any relationship between the broker and the service. And they get the remuneration question signed off by their own compliance function rather than assuming. None of that is legal advice — it's a description of careful practice, and your own adviser is the right person to confirm what applies to you.

One thing we won't do is suggest ways to structure a fee so that it sidesteps the conflicted remuneration rules. The NCCP's anti-avoidance provisions exist precisely to catch schemes like that, and any broker thinking about remuneration should be designing for compliance, with their own advice, not around it.