Finance brokers slam “hysterical and misinformed” royal commission reporting

The peak body representing Australia’s finance brokers says some of the commentary around brokers from the banking royal commission is not only sensational and misleading but seeks to disparage an entire industry made up of predominantly small business owners.

The executive director of the Finance Brokers Association of Australia, Peter White, said some of the reporting displays a lack of understanding of the sector.

“Journalists have confused terms like ‘introducers’, which is a program run by some banks, with finance brokers, who are industry professionals.

“We had the ABC’s Emma Alberici incorrectly state on national TV that a gym owner can set themselves up as a mortgage broker, implying that no training or qualifications are necessary, which is ridiculous.

“We’ve had an article by an economics writer calling for mortgage broker commissions to be scrapped and part of the stated reason was remuneration that the industry has already eliminated.”

Mr White said mortgage brokers were qualified, new brokers received years of mentoring and all brokers undergo ongoing development for their entire career.

He said it is ignorant for anyone to imply that a few people who do the wrong thing represent an entire industry, or that brokers are not professional and skilled.

“Finance brokers ensure the loans are not unsuitable for their clients, can access a wide choice of products, provide expertise, offer experience and give excellent service.

“Our industry is offering consumers what they don’t receive at the banks.

“Consumers are not paying more or disadvantaged by using a broker, but on the contrary enjoy an advantage over direct bank customers.

He said that like in any industry there are a very small minority of people who act improperly, but, “the fact that we see those brokers losing their legal right to practise is a sign of strict regulation that works.

“That a high percentage of Australians use brokers shows the level of confidence and trust consumers have in our industry.”

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ABC and Emma Alberici get it very wrong on mortgage brokers

The Finance Brokers Association of Australia (FBAA) has accused the ABC and its controversial chief economic reporter Emma Alberici – who was recently criticised by business groups and the Prime Minister over comments about corporate tax – of misrepresenting the qualifications of finance brokers, saying she owes the thousands of hard working brokers across the country an apology.

During an episode of the clearly inappropriately named “Matter of Fact” hosted by Stan Grant, Alberici claimed that “anyone can set themselves up as a mortgage broker, even a gym owner”, as she confused a bank’s “introducer program” with professional mortgage brokers.

FBAA executive director Peter White said finance brokers work within a very strict regulatory environment and all brokers must have at least a Cert IV in Financial Services (Finance and Mortgage broking), though many have higher degrees, be mentored for two years and continue ongoing training.

“Entry into this industry could be described in a way like a traineeship, where brokers receive a combination of theory and formal training, plus guidance and on-the-job training, as well as ongoing development for their entire career.

“As those within the industry are aware, training never stops, and in fact is mandatory for brokers to meet their regulatory and association requirements.”

He said the banking royal commission has focused on some introducers and brokers in its first few days, but it is ignorant and unprofessional for any journalist to imply that a few people who do the wrong thing represent the entire broking sector, or that the industry is not professional and skilled.

“The media must be careful how they report from the commission, and the FBAA will not stand by and allow finance brokers to be misrepresented.

“Unfortunately like in any industry there are a very small minority of people who do the wrong thing, but the fact that we see brokers losing their legal right to practise is a sign of regulation that works.

“It’s a sign that people should have confidence in the broking sector.”

Mr White said the ABC should publicly correct the record and apologise.

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We need more women!

The Finance Brokers Association of Australia (FBAA) is planning ways to attract more women to the industry, revealing that the percentage of female brokers is significantly below the overall percentage of women in the financial services sector.

FBAA executive director Peter White says that for years the industry has been talking about the need for new brokers to meet increased demand and to replace retiring brokers, but has neglected to properly focus on half of the potential workforce.

He said that while ABS statistics show that in the overall financial services sector, women represent 55 per cent of the workforce, only 29 per cent of FBAA members are women, a figure that is indicative of the industry as a whole.

“I think this may reflect the origins of finance and mortgage broking, as brokers visit people in homes after hours, which may not suit a lot of women. But times are changing,” he added.

He said technology now allows brokers to do interviews by video, but customers and lenders still prefer face to face encounters.

“Personal service will never be compromised by our industry because that’s what sets us apart and has contributed to brokers writing around 56 per cent of mortgages, but it’s time to educate the market and lenders to use modern resources which brings flexibility not only to clients, but to finance broking professionals.”

He said women considering entering real estate and other similar careers due to the flexibility and rewards, should consider finance broking.

“The FBAA has been very proactive over recent years in attracting younger people to the industry, and the fact that so many of our young guns won a large share of the categories at last year’s Awards of Excellence showed the success of our programs.

“Now we must accept that our industry is not on the radar for many women, so the FBAA is developing plans to change this.”

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Morrison has it wrong on comprehensive credit reporting, says finance broker body

As the Banking Royal Commission starts, the peak body representing Australia’s finance brokers has warned Treasurer Scott Morrison that draft legislation to force banks to hand over more detailed customer credit information will potentially backfire.

The treasurer, who last week introduced legislation mandating ‘comprehensive credit reporting’ (CCR), predicted that customers with a good credit history will be able to obtain lower interest rates, however executive director of the Finance Brokers Association of Australia (FBAA), Peter White, said there “is no chance in hell” this would happen.

“What will happen is that banks will maintain their current interest rate margins for customers with a better credit file, and increase the rates for those who have been through past difficulties under the guise of being of lesser quality or higher risk,” he explained.

“This normally impacts those who can least afford to pay higher interest rates, so it exacerbates their problems and helps no one.”

Mr White said CCR has played out badly in the USA where borrowers are punished for issues that happened 10 to 15 years ago.

“This is wrong, and we must be very cautious this doesn’t happen in Australia, as we will restrict access to debt for those who shouldn’t be restricted.

“Penalising people with higher interest rates is unfair and will lead to very poor consumer outcomes.”

The FBAA has urged Parliament to reject the legislation and says it will make its views known directly to the treasurer.

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Productivity Commission gets it wrong on brokers

The executive director of Australia’s peak body representing finance brokers has slammed the section of yesterday’s draft report into competition in the Australian financial system – released by the Productivity Commission (PC) – that refers to brokers.

Peter White of the Finance Brokers Association of Australia says there has clearly been a lack of research by the PC because what they are calling for either already exists under legislation or are a part of reforms already being worked on by the industry in association with ASIC and Treasury.

“The authors of this report should be embarrassed, because it was full of incorrect figures and misinformation, even getting the number of brokers wrong.

“Honestly, how can an organisation like the Productivity Commission be so clueless about a major industry they are supposed to be researching?”

Mr White said the preparation of the report was done with no consultation with the industry.

“One of many examples of the PC’s lack of understanding is the call for disclosure of broker commissions when this is already in legislation and has been for years.

“They clearly have no idea about the current legislation and haven’t bothered to talk to ASIC about the current comprehensive reform process being undertaken with industry right now.”

The broking head, who has been involved in the industry for 39 years said that if it wasn’t for brokers in Australia, there would not be the pricing competitiveness and product enhancement that exists today.

Examples are redraws, offset accounts, lines of credit against a residential house — all brought in by the competition and the development of products in the broking sector.

“Finance brokers represent over half of all mortgages written in Australia and they do so within a professional and highly regulated environment.

“There would not be a week where I’m not in discussions with regulators or government on behalf of our industry, and together we have increased accountability and transparency, while lifting standards.

“If a finance broker provided a customer with the level of misinformation that is in this report from the Productivity Commission, they’d lose their licence.”

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Finance broker peak body sceptical of big bank discounts

The Finance Brokers Association of Australia (FBAA) is sceptical about moves by the big banks to set aside hundreds of millions of dollars to enable them to offer big discounts in the property borrowing market.

As reported by the Australian Financial Review, the big four have allocated $600m between them to offer rates that haven’t been seen in more than 60 years.

At the same time, smaller lenders are being squeezed out and FBAA executive director Peter White said the first thing that comes to mind is the caveat emptor – buyer beware.

“Nothing comes for free and if it seems too good to be true it probably is,” he said.

“If what is being reported is the case, then this in essence enables the banks to buy business to increase their databases and profits.

“They will also cross-sell insurance and financial planning, plus a whole swag of other products.”

The big banks hope their near-record low interest rates will incentivise borrowers to invest in the property market in light of indicators that it is starting to cool off. This strategy is also about encouraging borrowers to swap lenders, so it’s not just about buying property.

Mr White said it is yet another example of those banks distancing themselves from the rest of the market indicators, while increasing their profits along the way.

“Once you’re on the hook, the big banks increase the margins on their existing loan books and make a huge profit to benefit their shareholders, their own jobs and pockets.

“Cheap introductory interest rates with lenders has been going on forever and this, if it is the case, is just a current variation of the theme.

“They aren’t giving away $600m as such without a pay day.”

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Finance brokers urge big banks to drop rates

The nation’s peak body representing finance brokers has welcomed drops in home loan mortgage rates by some smaller lenders, saying it would benefit borrowers if the big banks followed suit.

The Finance Brokers Association of Australia (FBAA) says lenders have cut their rates in a move aimed at attracting owner-occupier and investment borrowers.

“It is good to see the non-banks, second tier and small lenders supporting home borrowers,” said FBAA executive director Peter White.

“But at the same time, it is disappointing the big banks like ANZ seem disinterested in trying to work with borrowers by doing the opposite and putting their rates up.”

Mr White hopes that at some point, the big five will come to the conclusion that using their size to take advantage of the market is not helping anyone.

“We hope in 2018 the big banks remember where their profits come from, and that is borrowers,” he said.

“And we encourage the banks not to stab borrowers in the back with out of cycle interest rate movements, or unjustified fee hikes.”

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