Banks 'stealing' from brokers

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There are serious problems facing the Australian mortgage broking industry, says Mortgage House managing director, Sarah Roberts, and it’s time for brokers to join forces.

Roberts tells Australian Broker major banks are ‘stealing’ from brokers by making it ‘easy’ for clients to seek out and apply for products online and that the industry risks fading away if action isn’t taken.

“The biggest problem facing brokers at the moment is differentiating themselves. Big banks have clearly invested significant capital into their customer engagement programs. If you go to CBA or Westpac’s websites, they’re much more sophisticated – it makes it easier to cut the middle man, the broker, out.”

Given that the majority of brokers can’t pour millions of dollars into fancy interactive websites, Roberts says the best place to focus energy is where the banks can’t: intimate client relationships.

“Brokers need to get closer to their clients, they need to be more integrated with their clients’ financial health – they need to protect them from the banks.”

To Roberts, that means regular financial health ‘check-ups’ and a move beyond the traditional model involving an annual Christmas card by way of keeping in touch.

Furthermore, Roberts says it’s time for brokers to band together and confront major banks on their propensity to ‘arbitrarily’ change brokers’ trail.

“It’s happening – it happened towards the end of last year with CBA. I think that there would be great value in brokers approaching banks as a group. The risk of them not doing that is banks will continue to arbitrarily change remuneration.”

She says that, while the MFAA holds significant sway in terms of lobbying potential, she feels an independent band of experienced brokers may be more effective.

“The MFAA is a powerful group, but I think there is a real opportunity here. If brokers sit back on their laurels and depend on the MFAA, who have been able to successfully – and unsuccessfully – lobby, they may not be successful. They need to have consortiums, brokers who’ve been in the industry for a long time, who really can collectively make a difference to the banks’ bottom line.”

The combination of slick new online loan application software and quiet remuneration changes could otherwise spell the gradual decline of the mortgage broking industry, says Roberts.

“I think a share of voice is something that needs some momentum behind it. I think it’s really for brokers’ own protection.”

  • bayside broker on 18/02/2013 11:20:59 PM

    Yep. Banks are a factory. They pump out porducts having them sold with little to no human intervention or more importantly ...advice. What next a mortgage vending machine....

  • SunnyCoastBroker on 18/02/2013 10:49:05 AM

    I'm with Sylvia. Why doesn't the MFAA spend some of our hard-earned membership fees on a prime time TV advertising campaign, highlighting the advantages of using brokers? This wouldn't jeopardise the funding they receive from the Big 4. Would it?

  • Broker on 15/02/2013 9:42:34 AM

    Couldn't care less, if I lose or lost a client to a branch , they are more than likely a client I won't miss too much ,and in the end they will get the service and advice what they deserve!

  • 1martym1 on 8/02/2013 1:32:59 PM

    I must have missed the CBA commission change at the end of last year. Please elaborate?

  • Richard Angus & Associates on 8/02/2013 12:38:36 PM

    Try NAB, they wont nick your clients

  • Mark Perth on 8/02/2013 12:27:29 PM

    I agree with the main point that we need to get closer to the clients since banks are "competing" (and not stealing) with us for them. As Ray above said, it's a free market. But that all this is all to blame to the "making it ‘easy’ for clients to seek out and apply for products online", Roberts, Really?!?

  • Anom on 8/02/2013 11:54:09 AM

    Most disappointing when client says Bank didn't ask me all these documents...you are asking too many questions and documents.......

  • Ray-Perth on 8/02/2013 11:22:35 AM

    This is a free market and lenders have the right to sell themselves, in the same way we do.

    Its up to the lenders or us to get closer to the clients. We as brokers are lucky cause we can do this because of our more personal service.

    I have never lost an existing client to a lender's direct or indirect approach. Almost every occassion they actually contact me and tell me what the lender did or said !!

  • Anonimous on 8/02/2013 11:15:50 AM

    Many valid points. sure there is a need for brokers to have a strategy, a voice and to know their place in the market. In Sydney we formed a group called the Brokers Forum, we meet on the last Friday of each month. Many brokers have come and gone and many have benefited from the collective wisdom and contributions. our website is called http://www.ifbf.com.au please have a look and join.

  • Sylvia on 8/02/2013 10:59:49 AM

    With all due respect to Roberts, I think she has her head in the clouds.The very same banks that we work with us brokers are also our competitors.The MFAA is also in bed with the mouth that feeds us and them. Bank are a business, they have all the control and quite frankly can do what they want.What the consumer needs is proper education about what a broker is and does and how they can benefit from one. The MFAA does not do enough to promote this education process.If brokers want more business and better pay then they need to penetrate the market more so that the banks have no choice but to accept that most of their business is coming from a creditable source and market share that they have less control over.Is Roberts suggesting that brokers go to banks whinging for a fair share of their business and then ask the banks to pay for it?? Commical!! I wish all buisness competition could be challenged like that.

  • Coast Broker on 8/02/2013 10:52:16 AM

    St George have been doing it since they got taken over by Westpac. Use to give St George a lot of my Business. Give then very little now. Branch staff will actively refinance an existing Broker introduced home loan if the customer asks about a Personal Loan for a Car even if it is only for $10k. Makes the St George Lender look good with their bosses. But not a good move for the Customer to finance a car over a 30 year home loan term. It is important to keep in touch with your clients.

  • Stan on 8/02/2013 10:47:23 AM

    Sarah is quite correct. What she forgets is that there is already an association run for Brokers by Brokers - FBAA.

    Perhaps she should think of joining and, when she sees what we are about, putting her hand up for a State Councillor position.

    Motivated and interested people are always welcome.

    Full Disclosure: I am one of the founding members of FBAA and am the National Secretary.

    Sarah: Have a look at our web site and contact your State President or Peter White our National President.

  • Mike C on 8/02/2013 10:45:43 AM

    Wholeheartedly concur with Steve L. We are a group operation of 'Planners', Accountants & 'Broking' / 'Consulting'. We set this up 10 years ago & already have that close relationship. At the end of the day the consumer understands that the individual banks/institution sells product in a non-impartial way. Whats the difference between that & purchasing a box of cereal of a supermarket shelf?

  • Tony on 8/02/2013 10:45:23 AM

    A recent round table of the Banks suggested that they did not consider online application for mortgages was something that would gather any steam for at least three years

  • Keith B on 8/02/2013 10:45:20 AM

    Nothing new to report here, banks have been stealing clients' for since time began.

  • MortgageBroker.com.au on 8/02/2013 10:43:10 AM

    Fully agree with the statement 'Brokers need to get closer to their clients'.

    Others cant push between you and your client unless you give them an opportunity!

    Don't squeeze them too hard though, they may not like it!

  • SteveL on 8/02/2013 9:01:17 AM

    Individual brokers who provide a truly diversified product offering (Mortgages, Financial Planning, Accounting, property etc)have very little to no risk of this happening. You don't need to be a "Huge player" to be able to do this just great with relationships and having the clients true financial interests at heart.

Australian Broker forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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