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Broker Referral Fees:  Referring clients to a lender when you cannot assist them

FAQsBobby Woon - Compliance Consultant QED Risk Services

Broker Referral Fees: Referring clients to a lender when you cannot assist them

Scenario: A client approaches the broker for a potential loan. The broker performs an initial analysis based on the information provided by client and makes the assessment that they cannot assist the client as the loan is deemed to be unsuitable due loan servicing issues.

The client approaches another broker and is eligible for finance based on their assets position.

Question from the Broker: "Are we able to refer clients we cannot assist to a lender who can and receive a referral fee?"

QED Answer: No. As a Licensee, you have made the assessment that the loan is unsuitable therefore you are unable to assist the client in applying for finance. If you were to refer the client, it could be deemed as providing credit assistance as you have made the initial assessment that the loan is unsuitable therefore you are referring the client to another provider who could assist the client albeit, with a different approval criteria. In other words youmay be deemed in assisting clients get a loan which they cannot afford (even by referring).

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