When marketing becomes advice: Compliance risks for mortgage brokers 

Clients often rely heavily on the expert advice of mortgage brokers in order to make major financial decisions. This means that financial marketing can carry more influence than some other industries. 

Ariel Kantor, Head of Risk and Compliance at BizCover, explains it like this: “Clients often read marketing content through the lens of trust. Even if something is written as general information, it can still be interpreted as advice.” 

Understanding where marketing ends and advice begins is an important risk management consideration for every mortgage broker. 

Understanding the difference between information, general advice and personal advice 

The distinction between marketing and advice is not simply about intent. It is also about how a reasonable person may interpret the content. At a high level: 

• General information provides factual, neutral content designed to explain products, services, processes or industry concepts without recommending a particular course of action. 
• General advice includes an opinion, statement or suggestion but does not consider a person’s objectives, financial situation or needs. 
• Personal advice goes further by considering an individual’s circumstances and recommending or influencing a decision based on that information. 

ASIC Regulatory Guide 244 explains that when communications are intended to (or can reasonably be regarded as intended to) influence someone’s financial product decision, then this could be regarded as advice. 

“Marketing should help people understand their options, not steer them toward a decision as if their circumstances have already been assessed,” says Kantor. “Once you start implying suitability, you could leave yourself open to a potential claim.” 

What about scaled advice? 

Scaled advice is personal advice, but it only focuses on one specific issue and does not look at a person’s full financial situation. This might also be referred to as single-issue advice.  

This does not automatically reduce a mortgage broker’s advice obligations. If a broker considers a client’s circumstances and their communication influences a financial decision, it may still be regarded as personal advice. 

How marketing content can create unintended advice risks 

The challenge for brokers is that consumers do not always distinguish between educational content, marketing content and advice.  

“People naturally interpret information through their own situation,” Kantor explains. “If your wording sounds like it’s addressing them directly or guiding their decision, it can be perceived as advice, even if that wasn’t the intention.” 

Small wording choices can significantly alter how a message is perceived. For example:  

• “This loan is perfect for tradies.” 
• “This solution is ideal for first-home buyers.” 
• “You should switch lenders.” 

These statements may unintentionally imply suitability, certainty or a recommendation. Advertising should be clear, balanced and not create unrealistic expectations; which includes avoiding exaggerated claims without evidence, overstating benefits or understating risks. 

5 Mortgage broker marketing mistakes to avoid 

Mortgage broker marketing can cross the line when it sounds like advice, promises an outcome, or leaves out key details that consumers need to make an informed decision. Here are five common mortgage broker marketing don’ts. 

1. Don’t overstate outcomes 

Claims that imply certainty can create serious compliance concerns. Some terms should only be used where they can be fully substantiated and are consistent with regulatory requirements. This includes words such as: 

• Guaranteed
• Best
• Lowest
• Risk-free. 

Overpromising can create unrealistic expectations and increase the likelihood of complaints or disputes if outcomes differ from what consumers expected. 

2. Don’t use regulated terms incorrectly 

Using regulated financial services terminology incorrectly, or using language that implies a recommendation rather than information, can lead to misunderstandings. 

Clear and accurate terminology helps consumers understand the nature of the service being provided and reduces the risk of misunderstandings. 

3. Don’t rely on industry jargon  

On a similar note, brokers should always strive to use plain English when communicating with their clients or target audience. Industry jargon and unexplained acronyms can confuse consumers and increase the risk that content is misunderstood. Instead, focus on simple, user-friendly explanations that help the audience understand exactly what is being discussed. 

4. Don’t ignore regulatory guidelines 

Mortgage brokers should ensure marketing content aligns with relevant ASIC guidance, including principles outlined in Regulatory Guides 234 and 244. 

Disclaimers are important, but they are not designed as a ‘get out of gaol free card’ when the content itself creates an overall misleading impression.  

5. Don’t skip the limits and conditions 

Balanced communication matters. Where benefits are discussed, brokers should also explain: 

• Key assumptions 
• Eligibility criteria 
• Important limitations 
• Risks and uncertainties 
• Relevant conditions. 

Consumers should be able to understand both the opportunities and the limitations associated with a product or strategy. 

Building a stronger compliance framework 

Maintaining compliance is not just about understanding the rules. It also requires processes that help ensure marketing content remains accurate, balanced and up to date. Regular verification, review procedures and ongoing professional development can help mortgage brokers reduce compliance risks, improve communication standards and build greater trust with clients. 

Verification and reviews 

Strong compliance processes help to avoid regulatory issues from arising in the first place, and can also help to build trust with clients. 

Before publishing marketing content, check whether information is accurate, balanced and consistent with regulatory expectations. This can include checking facts, confirming statistics, validating comparisons and ensuring any claims can be supported by evidence. 

This is particularly important when discussing loan products, interest rates, lender policies, industry trends or customer outcomes. 

Having documented approval processes or cross-functional reviews may also help. 

Professional qualifications and certifications 

Professional qualifications, certifications and ongoing training play an important role in helping mortgage brokers maintain industry knowledge and meet professional obligations. 

While qualifications and industry memberships do not remove compliance responsibilities, they can help brokers stay informed about regulatory changes, lending requirements, responsible lending obligations and industry best practices. This can help to reduce the risk of using misleading, unclear or outdated information in marketing materials. 

Professional Indemnity insurance as a safety net 

Even with strong compliance processes, misunderstandings and allegations can still occur. This is where Professional Indemnity insurance may help. 

Professional Indemnity insurance protects mortgage brokers against losses claimed by a third party due to alleged or actual negligence in your professional services or advice. Subject to applicable limits, a Professional Indemnity policy covers compensation payable to a third party together with your defence costs (which can include legal costs, investigator costs, and expert fees). 

For mortgage brokers, Professional Indemnity insurance is something to consider as part of a broader risk management framework alongside compliance controls, review processes and ongoing training.