Loan Tip: Why Brokers cannot Help with Margin Loans

A margin loan is classed as a financial product and to advise on margin loans the person would need an AFSL or Australian Financial Services Licence, or to be an Authorised Representative of an AFSL holder.

Brokers generally have a different licence, an Australian Credit Licence or ACL, or be an Authorised Representative of an ACL holder.

Some rare people hold both (I used to but not anymore due to the cost)


Relevant Legislation

S 761EA Corporations Act 2001

S 763A Corporations Act 2001


ASIC’s commentary can be found at Margin lending | ASIC - Australian Securities and Investments Commission

 

Margin loans also come with license issues for financial advisers. They cant charge upfront or ongoing investment fees like they used to. Super complex advice etc. Margin facilities also tend to be "tied"to the lender and its a bit like a platform limits choice eg wraps. This can be restrictive and controlled.

Margin loans come with too many conflicts eg rate is 5% + when a OO equity loan can be 2%ish. Less control and a far broader product choice. No margin calls. Many parties (incl stock brokers) encourage such investors to follow the path of least resistance and encourage property equity loans.