Broker numbers could shrink by 30%

by Adam Smith10 Apr 2012

Broker numbers have decreased dramatically since the advent of the NCCP, but the blood-letting may be far from over.

Fujitsu Australia and New Zealand executive director Martin North has said that the broker numbers rationalisation could be dramatic due to the "new normal" of low credit growth.

“My theory is in Australia, we’ve already seen around 30% exit the market, and there’s probably about that number left to go,” North told Australian Broker.

North pointed to a massive reduction of broker numbers in the UK following the GFC, and forecast that Australia could follow a similar path.

“If you compare the number of brokers to population we have here to the UK, we have twice as many broker numbers as in the UK. In the UK, there was a rationalisation of broker numbers through the GFC, and that has continued since then. The number of brokers there has halved from that lower number,” he said.

North said the catalyst behind a decline in numbers is the increased cost of doing business. As the cost of compliance comes to bear and mortgage demand continues to suffer, North said more brokers could leave the industry to seek out more profitable pursuits.

“If you look at the commission pools, the commission pools are so much lower than previously because the number of loans written has gone down. At the same time, the costs – and this is partly NCCP and partly the additional obligation placed on brokers by lenders – the costs of writing business and managing business have gone up. In an atmosphere where the pool of commissions is going down and the cost of business is going up, I don’t think we’ve seen the end of the rationalisation,” he said.

However, North argued that the brokers left in the market could see a significant increase in volumes.

“I actually think chances are that total volumes through brokers will continue to grow as new banks enter the market and existing banks try to trim their own costs,” North said.

Related stories:

Industry headcount to dwindle under 'new normal'


  • by Donut 10/04/2012 10:22:51 AM

    Broker numbers fell after the GFC, mostly because their businesses were not strong enough to cope.
    And after regulation,many of us, I thought, were prepared for another large exodus as brokers that
    did not, or could not, work in a Regulated environment.I have long thought that Mr North and his surveys regularly look for broker error and take the first opportunity to "Bag" us.

  • by Country Broker 10/04/2012 11:41:14 AM

    This must be of a great concern to the MFAa who still seem hell bent on wanting all brokers to have a diploma by June 30th 2012 , they need to have a cloase look at this and how they are supporting their broker members(I have a Diploma).
    what i am seeing is the MFAa executive not dealing in reality , most brokersd cannot see why the need a Diploma to belong to the MFAA when all you need for licencing is a Certificate IV . The FBAa are just laughing because that is wher the brokers with Cert IV will go !!