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Broker commissions could breed risky lending: RBA

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Julia Corderoy | 26 Mar 2015, 08:00 AM Agree 0
The Reserve Bank of Australia has warned banks over increasing broker commissions, saying it could create “significant amounts” of risky lending
  • Aaron Sainsbury | 26 Mar 2015, 09:10 AM Agree 0
    The suggestion by Stevens is that lending originated through the broker channel is at greater risk of default. This is incredibly offensive and ignorant. It is widely known that broker-originated loans have a significantly lower delinquency rate than those originated through lenders' proprietary channels. I expected better.
  • John | 26 Mar 2015, 09:12 AM Agree 0
    Gee RBA, what are you saying? Does this mean you think brokers are not honest? Or do you say they are only looking at the commission they receive and not look after the customer?
    Look at Branch land before you point the finger at the Broker
  • Broker Chris | 26 Mar 2015, 09:12 AM Agree 0
    Isn't this called competition and that what benefits the consumer????
  • Alex | 26 Mar 2015, 09:13 AM Agree 0
    The Reserve Bank clearly has no interest in gaining an understanding around the broker market. You'll find that branch managers at your local bank are much more prepared to engage in a bit of card shuffling to get deals over the line and boost their numbers more so than brokers, because they're much less likely to lose their livelihoods in doing so, especially if the example of CBA is anything to go by. Complete and utter nonsense.
  • Tom | 26 Mar 2015, 09:15 AM Agree 0
    The banks can't win can they??

    They are getting crucified by APRA & ASIC for high LVR lending on one hand, and then when they try to reduce the risk to their book by targeting low LVR borrowers, they get hammered by the RBA on the other !!

    Perhaps our Government bodies should get together and formulate a prudential plan, and then perhaps they could all use it !!
  • Paul | 26 Mar 2015, 09:20 AM Agree 0
    Absolute rubbish. After the gouging brokers took post GFC, the banks are now offering that extra money to customers directly as "rebates" and monster discounts on SVR, banks are more profitable than ever and delinquency rates are down - despite more loans being originated by brokers. Final credit decisions are still in the hands of the banks and therefore they are responsible for approval of loans, even if they are "outside their risk tolerance or otherwise inappropriate". I think you've got bigger things to worry about Glenn.
  • Adam Ingham | 26 Mar 2015, 09:24 AM Agree 0
    The question to ask is how exactly if banks use brokers more does risky lending grow? (I assume that is what is being said in a convoluted way!). Once again these guys don't understand how the broking world works. We use the same Credit Policies as the Bankers!! How are Broker Loans more Risky??
  • Sandie Foreman | 26 Mar 2015, 09:24 AM Agree 0
    Aaron, I completely agree and the reference to "short term interest rate specials" implying that brokers / lenders get a client hooked into a loan on a low initial rate is also incorrect, all the additional discounts on rates that I get pricing for are for the life of the loan so brokers can and do add real value to our clients
  • Awesome - Albert | 26 Mar 2015, 09:52 AM Agree 0
    I agree, lets get rid of commissions, incentives, paying people bonuses for good performance, and put everyone on the same wage regardless of ability.. Oh.. That's a problem, that would be communism. Brokers are simply outsourced Bank employees who get paid on performance and results. Why Stevens thinks this increases risk is beyond me.
  • fat albert | 26 Mar 2015, 10:03 AM Agree 0
    How about the spot light go onto bank lending staff for a change? NCCP doesn't seem to apply to the banks... So many examples... Ignoring a mother on maternity leave and using her last years group certificate to demonstrate income... A client meeting with a lending officer and then receiving loan approval & docs when he never signed an application & that bank lender had never even met his wife! Just two of many examples that I'm sure many other brokers can relate to... Where are you ASIC? Where are you RBA?... Of course it's always the broker putting the industry at risk isn't it?
  • AF | 26 Mar 2015, 10:18 AM Agree 0
    Someone please explain to all these authorities that we have NCCP & the Banks approve/decline loans. How dare we refinance someone & save them money.
  • Clarke Kent | 26 Mar 2015, 10:24 AM Agree 0
    And to think Stevens sits back on his tax funded guaranteed six figure salary, superannuation, overseas paid trips and can make a such an irresponsible statement and expect to retain credibility?
  • SEQ Broker | 26 Mar 2015, 11:06 AM Agree 0
    Irresponsible Cods Wallop. If the RBA sincerely believes a few extra bucks is going to sway a lend away from a clients interests then they all need to re apply for their jobs. Worse if this is the kind of decision making that is supposed to be guiding Australia's economic policy then I am now afraid for all of us. Another example of a high paid government employee either not understanding what he is saying or is purposefully buddying himself with the Big 4. I wonder what is in his pay packet this week.
  • Papery | 26 Mar 2015, 11:56 AM Agree 0
    Yeah... Heaven forbid the remuneration structure becomes a true reflection of the work involved (pre & post approval/settlement) & the risk we carry of clawbacks lasting up to 2 years... This type of tripe just make me ANGRY!!!
  • fat albert | 26 Mar 2015, 12:25 PM Agree 0
    How about the spot light go onto bank lending staff for a change? NCCP doesn't seem to apply to the banks....so many examples....ignoring a mother on maternity leave and using her last years group certificate to demonstrate income....a client meeting with a lending officer and then receiving loan approval & docs when he never signed an application & that bank lender had never even met his wife! Just two of many examples that I'm sure many other brokers can relate to....where are you ASIC? Where are you RBA?....of course it's always the broker putting the industry at risk isn't it?
  • QEDRisk | 26 Mar 2015, 12:36 PM Agree 0
    I do wonder where the RBA have been all these years. They get some data from APRA and in total isolation, without actually bothering to get the word from the street, they go and make these sweeping statements. I wonder if the folks at the RBA that royally decide these things have ever seen a mortgage broking business?

    So many of our mortgage broking clients complain that QED's audits mean they have to turn away business on real-world affordability and the consumer then goes off to a bank branch and gets the loan. Try that on for risk Mr Stevens!!!

    This all just smacks of ivory tower syndrome. Good on the MFAA and FBAA for going after these idiots.
  • Really? | 26 Mar 2015, 12:51 PM Agree 0
    How many other industries are still receiving lower rates of pay than they were 9 years ago. eg trail at 0.25% now 0.15%. And upfronts were also 0.7% 9 years ago - now some are just getting back to that level; and many aren't.
    Yet COSL has doubled, the licence fee goes up every year, MFAA membership increases & other govt fees. Clearly Stevens assumes we are the only industry that continually has to absorb them.
    Based on his reasoning, we would still be paid at today's rate in 20 years time.
    Pity some people couldn't do their research prior to making bold statements.
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