A new mortgage website launched this week –
which sees banks and brokers “bid” against each other to win mortgage business straight from the consumer –
isn’t gaining support from the broker community.
The site, flongle, boasts that it can offer a consumer a larger range and fairer deal than going to a broker or going direct to a bank, because it is not affiliated with any lender or mortgage broker and it doesn’t work on commission.
Phil Naylor, MFAA
CEO told Australian Broker
that the site is underestimating the importance and value of mortgage brokers to consumers.
“What most of these [mortgage websites] forget or gloss over is the value of credit advice that consumers seek from brokers. Brokers didn’t get to 50% of the market by being simply ‘tick and flick’ merchants. Advice can't be replicated by a web site.”
Justin Doobov, managing director of Intelligent Finance said the site might be relying too much on consumers knowing what they want or need in a loan, which often isn’t the case.
“Majority of clients who walk through the door might want certain features and functionality or the cheapest rate, but by the time you sit down and nut out what their situation and goals are now and how their situation and goals may change in the future, then everything changes. You will often find that what the client initially wanted is not the type of product that their broker would end up getting them, because it isn’t the right product for them in the long-term.
Doobov is also concerned about the quality of the “bidders” on the site – who can compete for loans for free.
“I think that it is going to attract brokers that are more inexperienced, can’t generate leads or haven’t built relationships, which can potentially give the consumer a bad experience with brokers and damage the reputation of the industry.”
Leah Busby, owner of Blackfish Finance said she is concerned it will only add to the already over saturated market that bombards consumers with information.
“There already is so much content and information on the internet, so the reason why consumers come to brokers is to get some reason and context behind all that information in the market.”
Busby said it may be good for some brokers to generate business, however she doesn’t think it will compete with brokers.
“It all comes down to relationships for me. Whether it is the relationship of the client with the broker or the broker with the lender, I think building these relationships where you can gain context and get proper financial advice is the most important thing, and that is where nothing can compete with brokers. Even if the consumer pays the higher fee to get the ‘human help’ to guide them through the process, it is still not a broker,” she said.
CEO says it is always good to see people challenging the industry, although there is still one big drawback of any online mortgage channel.
“Flongle has looked at the industry from a different angle and I encourage that. It is good to see some entrepreneurial creativity to challenge the industry. They are advocating a more DIY approach to getting a home loan and asking if consumers really need a broker – and that might work for some people. However, there is still one drawback in that a consumer misses out on that professional and personal guidance, and that is very important when entering a home loan.”
White also commented on the site marketing its fee-for-service structure as eliminating bias caused by the traditional commission structure that brokers use.
“Under the NCCP, there is not that bias anyhow. The way that the NCCP is written is to ensure that things like that don’t happen, and speaking on behalf of our members at the FBAA
, I can say that I really don’t believe that is a big issue in our industry,” he told Australian Broker