An industry participant today wrotein the Mortgage Professional Australia Magazine about 'How a financial "gift" could turn into a nightmare.'
In the article the writer poses an interesting question about broker's responsibilities when it comes to "gifts" provided by parents, and the parents' attempts to recover this debt in the event of a relationship breakdown. If a broker is having parents sign the funds away as a "gift" for the lender, could the parents later have recourse against the broker when that "gift" was actually an interest-free loan and the broker 'should have known'?
Whilst we can't comment on the likelihood of any such claims against a broker being succesful, even if a case was fairly fanciful that still threatens many hours dedicated to a protracted court case instead of writing business and giving your clients the attention they deserve!
Here at QED, we're inclined to agree that at the very least, this is a risk you want to be managing- in fact, long time subscribers of our compliance services will note that starting from our 2019 reporting, we will be adding tests related to ensure that you are managing the risks to YOUR business by always recommending clients seek professional legal advice regarding any "gifts" (or really, interest-free loans).
Don't just take our word for it however, give the original article a read and join the conversation: