Responding to recent claims that consumer complaints about brokers would spike in the future
, Peter White, executive director of the Finance Brokers Association of Australia (FBAA
), has criticised the consumer advocacy groups as looking for someone to blame.
In an interview with Australian Broker
, White said that as interest rates go up and people wind up in hardship, human nature dictates they will point the finger at someone else.
“But there’s nothing there that’s going to be a broker’s fault,” he said. “At the end of the day, the lender approves the loan and the loans are approved under the lender’s credit criteria.”
In these circumstances, brokers will actually become a “valuable component” to ensure that if clients’ circumstances change, they can then move with whatever that change is.
“I can’t see why the market would turn around and blame the brokers for hardship issues as interest rates rise,” White said.
“I think sometimes the consumer advocates are just looking for someone to blame for something but it would be very inappropriate to be throwing stones at the brokers.”
Furthermore, serviceability criteria such as the required 2% margin on top of the current interest rate should ensure that clients don’t feel hardship if interest rates do end up increasing. However, he said this depended on whether they continued to conduct their finances as they did when the broker originated the loan in the first place.
“If people go out and get other unsecured debt and so on like that, that’s a little bit outside the broker’s scope if that’s where the hardship comes from.”
Since 2010 when the NCCP came in, best practice principles and responsible lending obligations have ensured that the majority of people always did the right thing.
“If somebody winds up in a hardship provision, you can’t instantly turn around and say it’s the broker’s fault. It may be. It could be. We’re not that ignorant to think that it couldn’t but it’s just not the default position. It’s also not the default position that it’s the lender’s fault or the borrower’s fault either.”
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