Credit Advisers, Consumer Credit and Equitable Fiduciary Obligations

47(1) Federal Law Review 64-90, 2019

38 Pages Posted: 20 Apr 2020

See all articles by Simone Degeling

Simone Degeling

University of New South Wales, Australia - Faculty of Law

Jessica Hudson

University of New South Wales (UNSW) - Faculty of Law

Date Written: 2019

Abstract

Consumers use financial intermediaries such as brokers and other credit advisers to navigate complex financial markets and to provide guidance on credit products. In 2017 the Australian Securities & Investments Commission reported that ‘[b]rokers … are responsible for arranging … half of all home loans in Australia’ (Australian Securities & Investments Commission, Report 516: Review of Mortgage Broker Remuneration (2017). The National Consumer Credit Protection Act 2009 (Cth) (‘Credit Regime’) regulates the conduct of such advisers including requiring disclosure of fees and some commissions. The Credit Regime also permits conflicts between the interest of the adviser and the client, provided that the adviser has in place ‘adequate arrangements to ensure … [that the client is] … not disadvantaged by any conflict of interest’ and that the conflict does not breach the adviser’s obligation to act ‘efficiently, honestly and fairly’. This article demonstrates that equitable fiduciary obligations also operate to regulate the conduct of the adviser in his or her dealings with the client. Such conflict and other conduct may breach any equitable fiduciary obligation thus exposing the adviser to equitable remedies. Equitable fiduciary obligations may thus be an as yet under exploited avenue of protection for consumers and a concomitant zone of compliance risk for those subject to the Credit Regime.

Keywords: Fiduciary, Consumer Credit, Equitable Obligations, Equity, Financial Advice, Financial Advisers

Suggested Citation

Degeling, Simone and Hudson, Jessica, Credit Advisers, Consumer Credit and Equitable Fiduciary Obligations (2019). 47(1) Federal Law Review 64-90, 2019, Available at SSRN: https://ssrn.com/abstract=3561311

Simone Degeling (Contact Author)

University of New South Wales, Australia - Faculty of Law ( email )

Kensington, New South Wales 2052
Australia

Jessica Hudson

University of New South Wales (UNSW) - Faculty of Law ( email )

Kensington, New South Wales 2052
Australia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
22
Abstract Views
196
PlumX Metrics