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.
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.