Controversial research sparks fee-for-service debate

by Caroline Dann23 Jul 2012

New research, which suggests consumers believe brokers are too expensive an option, has one major aggregator concerned it could fuel the fee-for-service debate.

 
The Loan Market survey asked brokers what the common misconceptions they faced from consumers were. 
 
It found many believed going directly to a bank would yield a better deal, and that broker services came at a cost.
 
Mark Hewitt, general manager of sales and operations at AFG, said some bank branches and direct sales teams "will have a field day with this sort of research if we go down the fee for service and advice path."
 
"It would be natural to try and make it appear the broker proposition was more expensive," he told Australian Broker Online.
 
"We must work hard to preserve the current commission model and educate consumers on the financial benefits of working with brokers."
 
He added that while the MFAA does "a very good job in educating consumers," more marketing could be done in light of the survey results.
 
"We could step it up even further if need be. It's very important to develop awareness of what brokers do, and how necessary they are in the market," he said.
 
"Expertise, industry relationships and the ability to access different funds make brokers so important. If consumers go direct to the bank, they run the risk of limiting themselves. Brokers are essential."
 
Loan Market's spokesperson, Paul Smith, agreed that the value of brokers needed to be reiterated to consumers.
 
“The reality is that a mortgage broker can negotiate your needs between several lenders and uncover discounts not available to those shopping on their own,” he said.
 
 
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COMMENTS

  • by KT 23/07/2012 1:48:04 PM

    Maybe brokers should actually add value to their meeting with clients....simply offering the same product as what is available for clients who contact banks directly is not adding value to borrowers

    How about promoting the ability of Brokers to able to compare loans between different banks in terms of functions/features of loans (that suit the borrowers circumstances) rather than give loan applicants a price comparison list?! MFAA you should be doing more to promote the value-add that brokers are capable of providing (other than price comparisons)

  • by ozboy 23/07/2012 3:38:45 PM

    AFG's SA manager is now running the MFAA so I am sure they will be able to add some influence there and get the consumer marketing program up and running ASAP.