Association hits back at attack on brokers

by Julia Corderoy08 May 2015
FBAA CEO Peter White says the findings of a Choice investigation into mortgage brokers reveals that ongoing education for brokers is critical, but it is not an accurate reflection on the industry as a whole.

Consumer advocacy group, Choice conducted a “shadow shop” where it sent five homebuyers to three of the biggest mortgage broker businesses in Australia – Aussie, Mortgage Choice and AFG. 

According to the consumer advocacy, the results suggest homebuyers should “take a close and critical look” at what their brokers come up with.

“Our sample was small, but we found few examples of good practice. Instead, our borrowers encountered pressure sales tactics, inappropriate advice, lack of commission disclosure and up-selling with little consideration of risk,” Choice said.

Howver, FBAA CEO Peter White – who was a part of the Choice expert panel judging the investigation – has rejected a call by the consumer group for ASIC to undertake an investigation into the mortgage broker market.

White said he was disappointed in the way the brokers surveyed did not comply with the NCCP, and believes it emphasises the case for brokerages to provide ongoing education.
 
However, he said none of the brokers were likely FBAA members, and believes the survey would have produced a different outcome if they were.
 
“This survey only looked at brokers from three companies – Aussie Home Loans, Mortgage Choice and Australian Finance Group (AFG), and two of those companies are not FBAA members,” he said.
 
He said he gave a poor rating to many of the brokers surveyed because they didn’t follow the right procedures, something FBAA brokers are required to do.
 
“I would call on those three companies to urgently review their internal processes for managing compliance under the NCCP, so that the public can have total confidence in our industry.
 
“I am confident that our members put the best interests of the customer first, and it is unfortunate that there are those in our industry that let us down.”
 
While White said he was happy to be a part of the expert panel, Choice had gone too far by thinking that three companies represented the industry.
 
“I spend considerable time travelling the country to defend this industry and lobby on behalf of brokers.
 
“Brokers handle around 50% of mortgages in Australia and are still the best way to get honest, transparent and objective advice.

COMMENTS

  • by Mike Phipps 8/05/2015 8:48:02 AM

    Perhaps Choice might be well advised to random shop a few banks with a focus on service delivery and credit undertakings not necessarily supported by the banks own credit managers. Costs incurred by borrowers who probably had no chance of a formal approval can often be averted via some good honest advice from an experienced broker who puts clients outcomes first and commission income second.

  • by Craig Budden 8/05/2015 8:57:47 AM

    It's hard to take Choice seriously these days. They used to be the consumers 'go to' point for product & service advice, but now they are offering electricity & home loan "switches", it's hard to believe it's anything but in their best interest to bag the broking industry.
    And really....5 couples were sent out? Hardly a base for making comments one way or the other. I bet they were all in George Street! :/
    As for FBAA comments. It's a very bold statement to claim that there isn't anyone that's an FBAA member who maybe doesn't follow "the procedure" correctly. There are good & bad in EVERY aggregator regardless of their professional membership, so that sounds more like an FBAA advertisement that factual comment from Peter White.

  • by Rob 8/05/2015 9:17:10 AM

    White said "none of the brokers were likely FBAA members, and believes the survey would have produced a different outcome if they were". Wow, big statement to make without having checked the membership credentials of each of the brokers involved in the survey. Mr White is delusional if he thinks that only MFAA Brokers are not complying correctly with NCCP.