The aggregation model has lost its way by not supporting brokers who have had their accreditation cancelled without reason, believes the head of a professional association.
Finance Brokers Association of Australia CEO Peter White
has not had any case brought to his attention of brokers having their accreditation cancelled
by lenders who then decline to give a reason – as highlighted by Australian Broker
earlier this week – but said he would be “more than happy” to step in and help should the broker be a FBAA
“Lenders need to be transparent and advise why accreditation has been cancelled,” he said.
He suggested brokers in this situation demand an answer and put pressure on the lender by speaking to the media to let the public know what is happening.
“Speak with your solicitor; speak to me if you're an FBAA
member. The lender is restricting your ability to trade and earn a living, therefore it's potentially anticompetitive and the ACCC should hear about it.”
But be careful, he warned.
“Make sure you have done your homework on this. If there is a certain volume requirement to hold [for] accreditation and you have not met that requirement then you have your answer and no legal grounds for complaint – albeit the lender should say so.”
Brokers commenting on the Australian Broker
site wondered whether the revised Privacy Act would change the situation and whether a broker who could not let his or her PI insurer know the reason for cancellation would be forced out of writing loans.
White clarified the Privacy Act does not make any difference and that a broker would not lose PI if he or she could not give a reason for the cancellation.
“It is not a material matter [for the insurer] unless it was caused by fraud or other illegal actions,” he said.
But White is worried brokers may be having their accreditation cancelled because of not meeting volume requirements, and said aggregators are not doing enough to stand up for brokers.
“Personally I don't agree with volume hurdles and if this is the case for termination it's wrong. Aggregation was originally bought in around the mid-nineties so brokers could, under a collective banner, meet the lender’s volume desires plus streamline processing and training.
“I feel the original concept of aggregation has lost its way especially on volume hurdles being imposed.”
Iconic Home Loans managing director James Pibworth also disagreed with lenders not providing a reason when cancelling accreditation.
“I think it’s common decency to give a reason for termination in any business partnership or relationship – this is no different.”
He said there are a number of reasons accreditation could be cancelled, but the broker should be told so behaviour can change in future.
“There may be processes in the broker’s practice that are incorrect and need changing – for example compliance checks, submission guidelines – [but] if the broker doesn't know what they've done wrong it wouldn't highlight areas of change.
“It could be something trivial such as not enough submissions – if a broker is starting out, for example, or the broker’s market doesn't suit that lender at that time – [but] the broker may become distressed that he or she has done something far more serious.”
Lenders 'acting as God' but nothing can be done, broker warns
'Dangerous situation' for broker who lost accreditation, says aggregator
Lender competition boosts mortgage incentives, commissions