Marketing or advice? How mortgage brokers can protect trust, stay compliant and avoid costly claims
Mortgage brokers occupy a position of extremely high trust. Clients rely on their guidance and judgement to make the best decision for their financial future.
This is just one of the reasons why the financial services industry is one of the most tightly regulated and scrutinised in Australia. And regulators pay close attention not just to formal advice, but to other business activities that can potentially influence customer decisions – including marketing. That means even seemingly general or educational content can carry weight far beyond its intent.
Ariel Kantor, Head of Risk and Compliance at BizCover, explained 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.”
In an environment where trust, compliance and communication are tightly intertwined, it’s essential to understand where marketing ends and advice begins – and how business insurance fits into the picture.
General information vs general advice vs personal advice
At a high level, the distinction between marketing and advice comes down to how specific and influential the content is:
- General information is factual and neutral. It explains concepts, processes or product features without expressing an opinion or guiding a decision.
- General advice goes a step further by offering an opinion or suggestion, but without taking into account an individual’s personal circumstances.
- Personal advice is tailored. It considers a person’s specific financial situation, needs or objectives and suggests a course of action based on that information.
“Marketing should help people understand their options, not steer them toward a decision as if their circumstances have already been assessed,” said Kantor. “Once you start implying suitability, you could leave yourself open to a potential claim.”
Why the distinction isn’t always clear in practice
While the definitions may seem straightforward, the reality is more nuanced. In practice, the line between marketing and advice is often blurred by tone, phrasing and context. Small language choices can significantly change how a message is interpreted. For example:
- Phrases like “This type of loan is ideal for tradespeople” can suggest that a product is suitable for a particular audience.
- Statements such as “You should consider…” introduce a directive tone that can feel like a recommendation.
“People naturally interpret information through their own situation,” Kantor explained. “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.”
He continued, “Professional Indemnity insurance is designed to respond to claims due to alleged or actual negligence, which may help in these scenarios if a client misunderstands your meaning.”
The risks of crossing the line
When marketing crosses into advice territory or creates a misleading impression, it can have serious consequences across compliance, client relationships and reputation. This can lead to claims from clients, which in turn can have a financial impact on your business, slow down business operations, and damage your reputation.
Regulators assess the overall impression of content, not just individual words or disclaimers. If messaging suggests certainty, suitability or recommendation without appropriate context, it may be considered misleading, regardless of intent.
At the same time, clients may rely on what they perceive to be guidance. If outcomes don’t meet expectations, they may revisit earlier communications and argue they were led in a particular direction. This can result in disputes, including complaints to bodies like the Australian Financial Complaints Authority (AFCA).
Staying on the right side of the line
Keep the following points in mind when marketing your services, whether that’s on social media, in a regular newsletter, a business blog, or anywhere else you advertise your business.
- Keep language balanced: Use neutral phrasing to reduce risk and avoid sounding like you’re guiding a decision, such as “may be relevant” or “depending on your circumstances.”
- Focus on scenarios, not prescriptions: Frame content around real-world scenarios rather than telling clients what to do. A “this could happen to you” approach helps highlight risks without sounding like advice.
- Present both sides: Always balance upside with key conditions, exclusions, and variables.
- Avoid implying suitability: Don’t suggest a product is right for a specific client unless a proper assessment has been made.
Consider business insurance
Even if, despite your best efforts, a claim is brought against you, then having adequate business insurance may help.
Professional Indemnity insurance protects you against losses claimed by a third party due to alleged or actual negligence in your professional services or advice. Subject to applicable limits, your Professional Indemnity insurance will meet the associated compensation payable to a third party together with your defence costs (which can include legal costs, investigator costs and expert fees).
Compare mortgage broker insurance quotes online today with BizCover.
This article was produced in partnership with BizCover
