Dodgy bank practices are damaging the industry: FBAA

by Julia Corderoy27 Jun 2016
Pressure on bank staff to push “unsuitable” financial products on customers is hurting the integrity of the industry, the Finance Brokers Association of Australia (FBAA) has warned.
The FBAA is responding to a Fairfax Media report, which claimed Commonwealth Bank staff felt pressured to meet performance targets to sell products which are not in the customers’ interests.
The FBAA’s Peter White said this is another example of the way banks and major lenders “stop at nothing” to ensure they improve their financial bottom line.
“This might be great for shareholders but comes at the expense of customers who are being offered loans that are unsuitable and unsustainable.”
White has now highlighted that this is a “fundamental difference” between bank-originated and broker-originated loans.
“It is all about transparency as banks are under no obligation to disclose commissions, unlike finance brokers,” he said.
“The Financial Services Union has got it right in condemning this ‘sales culture’ within the banks. In fact it is this type of practice that provides ammunition to those pressing for a royal commission into the banking industry.”
Unlike banks, which have volume and sales targets, White said brokers are more inclined to act in the best interests of consumers. 

“Brokers rely on repeat business and know the value of keeping the customer happy and more importantly sustaining an honest and open financial relationship,” he said.


  • by 27/06/2016 8:36:28 AM

    I'm a CBA customer. Every time I've spoken to them in a branch or over the phone recently (approx 6 times) I have been offered life insurance.

  • by Sarcon 27/06/2016 9:13:19 AM

    I can only assume that Peter White has the sarcasm switch turned ON! Is he seriously suggesting that brokers do not also have a "sales culture"?

    With respect to home loans, the banks operate under the same standards and laws i.e. NCC that brokers do. Given the consistent and frequent prosecutions against brokers by ASIC, Rather than having a go at banks he would be better off ensuring that his membership are following the rules.

  • by Biting The Hand 27/06/2016 10:10:31 AM

    Seriously, it's time some senior people in this industry stopped to take a look at how they are handling themselves in the current environment.

    Since the ASIC Remuneration Review was announced the Mortgage Broking industry has done nothing but look to shift the attention elsewhere to anyone and everyone - except themselves. One minute it's emerging channels such as Mortgage Referrers or Online Tech Disruptors, and now the FBAA have the audacity to suggest that banks themselves are the problem. Last time I checked, Mortgage Brokers distribute bank products and rely on the support of the banks don't they? Imagine the response from senior bank people when they read this garbage.

    The industry can't have it both ways. On one hand the industry is happy sing like a canary and gloat about the 60% market share they deliver, but on the other hand they throw the toys out of the cot whenever someone suggests closer scrutiny of the industry is required, or whenever an emerging channel might have claims to offering an alternative fulfillment solution to clients. If the industry wants to fly the flag over claims of 60% market share, then perhaps have the guts to accept that maybe Brokers are part of the problem and rather than spend time laying blame elsewhere, take the lead on being part of the solution to better client outcomes.

    This article reads as though Brokers have never acted in their own interests with a client outcome. ASIC must be choking on their breakfast.

    Might have expected such comments from an inexperienced or misguided Broker - but to come form a senior industry head - leaves me scratching my head.Time for the industry to face scrutiny (and increased regulation) head on and grow up.