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Broker independence could be under threat: Inquiry

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Julia Corderoy | 16 Jul 2014, 09:38 AM Agree 0
The interim report of The Financial System Inquiry has re-opened the debate over the independence of aggregators and brokers, and an industry leader has claimed this independence could be under threat
  • Wozza | 16 Jul 2014, 10:01 AM Agree 0
    Been broking for 8 years and I can't recall any client that I have steered to any product because of incentives or additional commission
  • John Whitten | 16 Jul 2014, 10:09 AM Agree 0
    If this is the biggest issue facing our industry we have nothing to worry about. I feel that Tanya Sale is doing more to push her barrow than save our industry. I have been a member of PLAN for 13 years, and the only incentive I've had from them, is with loans to PLAN Lending I receive 100% of the commission. This has had no bearing on me sending loans to PLAN Lending. NAB have never given me any incentive other than normal commissions to put loans their way or to sell their products. If I were directed, or made to put loans to NAB, to keep my membership of PLAN, I would leave PLAN immediately as would a lot of other brokers. NAB is not that stupid.
  • DC | 16 Jul 2014, 10:19 AM Agree 0
    The model of bank owned mortgage aggregators (fully or partially) has worked elsewhere (Canadian market for example) for many years. There has been no negative impacts to either the broking model itself or to the consumer. In many ways its an endorsement of the mortgage broking model that has been developed. We have gone from banks looking at how to cap / manage the flows in third party in favour of their proprietary channels to now investing in it. Agree that independence is paramount to the model & so long as this continues - bank investment in the channel is a good thing.
  • methinks | 16 Jul 2014, 10:22 AM Agree 0
    Consumers who use brokers are time poor and in need of someone to sift thru lenders and their offerings. Bank owned aggregators don't suit the model - Hi I'm from A and we are owned by C. Over time when consumers become aware of who owns what may very well erode the trust they place in the broker. If brokering groups would switch to the independents, perhaps this needs to be done.
  • Peter E | 16 Jul 2014, 10:27 AM Agree 0
    I agree totally with Tanya. The banks should not be allowed to own aggregation models at all if the system is to remain fair. We don't see NRMA offering a suite of other insurers products for sale over their counter do we? Whether the independence is relating to the aggregator or broker, both are compromised when owned by a lender in its own right. My opinion.
  • Steve McClure | 16 Jul 2014, 10:42 AM Agree 0
    Wozza, that's perfect, and its the way of many fine brokers. But, it's all about transparency and clear disclosure.

    If a client ends up with a NAB loan from a NAB owned aggregator, the client has to be aware of that (and at the moment they aren't) so they can assess the broker's advice.

    Therefore, with your suitable recommendations, the client would be informed & well served. That doesn't hurt anyone's business.
  • Brad Oliver | 16 Jul 2014, 10:49 AM Agree 0
    I agree Wozza. Lender or Aggregator incentives don't come into it when I am assessing the best place for the clients needs and I am sure most other reputable brokers share this philosophy.
    Look after the client's interests first and they will come back again and even send you referrals
  • Bottom Line | 16 Jul 2014, 10:52 AM Agree 0
    Sounds like a smoke screen to take
    people away from the real issues of the industry.
  • Tim H | 16 Jul 2014, 11:13 AM Agree 0
    Big question here is how far do we need to go with disclosure? Like Wozza and the vast majority of brokers I am not swayed by who owns my aggregator FAST or what incentives are offered whether they be from FastLend or other lenders. I provide my clients with a list of our panel lenders and how much commission they pay and the lenders clawback policy. Do I need to put another column highlighting who owns each lender? Do I then need to include what share of ownership is owned by each organisation or individual for that matter (eg: my fellow broker down the road who tells me he has some bank shares etc)
    Sounds ridiculous because that is where this discussion is going.
    The reality is that the vast majority of brokers are doing the right thing by their clients. Those that aren't will be weeded out over time and like most other industries they will be replaced by someone else who is unethical and so it will go on.
    I've been a broker for 17 years and in the industry for 35 years. Do the right thing by your clients and you will receive the rewards and experience longevity in this wonderful industry.
  • Regional Broker | 16 Jul 2014, 11:13 AM Agree 0
    We see this assertion time and again, My aggregator may be owned by a Bank but I am fully licenced and regard my self as independent, in every way . I have never ever been pressured to use a product or white label product . I am obliged to recommend a loan that suits the client needs . Murray may be talking about the likes of Aussie Brokers or the like. This assertion to me is at best ill informed .
  • Wozza | 16 Jul 2014, 12:11 PM Agree 0
    Well "Regional Broker" I work for Aussie and my comment still applies
  • Philip L | 16 Jul 2014, 12:19 PM Agree 0
    The banking system created aggregators by refusing to deal with individual brokers because of the supposed extra workload. After the CBA debacle re financial planning, a broker must wonder what plans the majors actually have?
  • Kat | 16 Jul 2014, 12:52 PM Agree 0
    Hi Regional Broker, I think your assertion about Aussie brokers specifically is as ill informed as Murray's is about brokers in general.
  • Broker | 16 Jul 2014, 02:03 PM Agree 0
    I am at the point that I never ever expect any common sense to come out of these think tanks!

    The only agenda at play - it how they can make even more profits, and if that means screwing brokers even further then that is what will occur.
  • Ed Ridge | 16 Jul 2014, 02:53 PM Agree 0
    According to ASIC we aren't independent, so something we are not cannot be under threat. If your aggregator owns a lender and you are offered an incentive (full commission let's say) then you would need to document that fact to the client and explain how this is not a case of "conflict" as per NCCP legislation. For this example I will use NAB/Homeside/Fast Lending/Choice Lending/PLAN Lending are all the same lender and of course NAB owns the aggregation company called Advantage which encompasses FAST/Choice/PLAN.

    For all those lenders where you can dial up or down your commission etc I would imagine this will add another layer of documentation to be provided to the client and documentation of how this is not a conflict.

    We have these "new" and "you beaut" things coming out from lenders which will add another layer of complexity around the client/broker relationship. I wonder why they would do that?
  • Steve McClure | 17 Jul 2014, 09:29 AM Agree 0
    Some good comments, like Tim H's & Ed's. How I assess it is that if we are paid commissions, we're going to have to cop full disclosure. But of course, it can't be ridiculously onerous & ill defined. So, all we are after is a set of clear disclosure terms, not just the current "guidelines"
  • Old Broker | 17 Jul 2014, 10:37 AM Agree 0
    How is the infrastructure spend going Tanya? Bit expensive?
    What about putting on new people , is that also a little expensive? IT infrastructure, Broker development, Broker recruitment , Broker Management, etc etc compliance costs, future compliance costs.... Good Luck and look at your PL and Balance sheet in the next few years , at least you tried! And yes sorry to ask what about your exit clauses for existing brokers , don't go changing that ....
  • SouthBrisBroker | 17 Jul 2014, 04:59 PM Agree 0
    I went to a presentation recently by the MFAA and the facts speak for themselves. The big 4 have 80% of the market and brokers only refer to them 73% of the there is no prob. As long as the broker is ethical..which most of us are.
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