'Dangerous situation' for broker who lost accreditation, says aggregator

by 29 Apr 2014
Aggregators believe situations where lenders cancel brokers’ accreditation without giving a reason are unfair and dangerous – but unlikely to change.

A Melbourne broker – who declined to be named for fear of reprisals – told Australian Broker he had his accreditation cancelled by a major bank without explanation why. The man’s aggregator had been slow to help, suggesting he get a court subpoena in an attempt to get the facts from the lender.

The broker feels he has been unfairly treated as he has no chance to defend the cancellation – and two aggregators agree.
AFG general manager of sales and operations Mark Hewitt said the broker has a right to know this information and the aggregator has a responsibility to obtain the details.

“On the rare occasion it does happen [to AFG-aligned brokers], we insist on disclosure from the lender and then conduct our own investigation into what happened. If the broker is in the right, we will support the broker and if the lender is in the right we will support the lender. But everyone is innocent until proven guilty.”

Hewitt said he has taken a strong stance on this in the past and has found lenders are normally co-operative.

“It used to be a semi-regular occurrence – we’d get a letter in the mail around four to five times a year – but now it doesn’t happen at all because the lenders understand I am not happy with them cancelling accreditation without giving a reason.

 “Tell that broker to give me a call and I’ll tell him how to sort the problem out.”

Outsource Financial CEO Tanya Sale said the aggregator should “go in to bat” for the broker.

However, the situation is tricky as many heads of agreement between the lender and aggregator have a clause where the lender can terminate the writer without giving any reason – this happened in the case of the Melbourne discredited broker.

Outsource has only had one broker who was discredited without reason and when the aggregator asked the lender for disclosure, it was refused.

“The banks just say ‘we can pick and choose who we deal with’, but unfortunately you still have to have those lenders on the panel,” Sale said.

“It’s a very dangerous situation for the writer – they may have been unfairly treated based on incorrect information, but don’t have a leg to stand on. That could ruin a direct writer’s reputation for no reason at all. And the aggregators are at risk as well, if the broker has been found involved with fraudulent activity but the aggregator is not told.”

Outsource would not withhold the cancellation reason from the broker if they got disclosure from the lender. “I’m a big believer of transparency,” Sale said.

However, she does not believe lenders will change their policies in future because they can be picky as to who they do business with.

“It’s a tough situation. I’ve heard of things from other aggregators where good quality writers have been discredited but they can’t even amend it. It could be something so simple which could be rectified, but the brokers aren’t given the chance.”


  • by rob 29/04/2014 9:15:29 AM

    It is a requirement of the brokers PI that they disclose any cancellation - other than for volume reasons. Surely his PI provider will want to know the reason. The broker may be forced out of writing loans unless he can provide a suitable explanation to the PI provider.

  • by Dave Robinson 29/04/2014 9:18:12 AM

    Isn't it time some of these aggregators started running their business on their OWN! All lenders have come out stating that the 3rd party channel is very important as we now write around 48% of all their home loans (and growing not like their own channels) yet aggregators keep hiding behind the lenders.

    I for one think it's about time aggregators took responsibility for their businesses and the agreements that they sign and if you are for transparency then let your members have a copy of the signed lenders agreements and don't tell me the lenders won't allow it due to privacy make it a condition of the agreement.

  • by Brisbane Broker 29/04/2014 10:33:54 AM

    If banks can pick who they want to do business why can't we. If particular bank is playing stupid why aggregates does not suspend them for period of time until they investigate them and put them back on panel once they sort the issue. In my financial planning arm once any of the super, fund manager or insurance company for what ever reason are doing something they are suspended for period of time of indefinite.
    You do this to one bank and if they loose 48% of they business for that mount they will change they approach straight away.

    In my opinion aggregates and professional bodies like FBAA and MFAA are just extended arm of banks because banks are giving them a money for run PD days and conferences and from my point of view it is 'conflict of interest'.