'Aggregation lost its way', says association head

by Calida Smylie30 Apr 2014
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 member.

“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.”


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  • by Barney 30/04/2014 9:19:22 AM

    maybe the associations should help more as well!
    Memberships are made up of brokers though of course we cant get the Banks offside since they pay to advertise in the journals and for conference booths at the annual soiree~!

  • by Country Broker 30/04/2014 9:19:43 AM

    The Comment is spot on as is the comment from AFG yesterday the aggregators MUST back the broker until they at least determine what the problem was .
    This situation shows that the aggregators who are 100% owned by a bank have a possible conflict of interest, if the broker who has had their accreditation withdrawn by a bank is the same bank who owns the aggregator !

  • by David Tansek 30/04/2014 10:27:02 AM

    Aggregators have lost their way loooong ago by accepting CBA and Westpac to dictate "broker'
    s personal volume"! By the way, that is against UCCC and ASIC rules principle also!
    Other lenders may have "better products", so clients are short changed!???
    Aggregators do not want to look at this, because it is their biggest money earners, just like government TAX, when petrol goes up!