A broker who had his accreditation cancelled by a major bank which refused to give any reason is warning other brokers about their vulnerability in the hands of lenders.
The Melbourne broker – who did not want to be named for fear of reprisals from his aggregator and future lenders – received a letter from the bank last week saying his accreditation had been cancelled. The bank declined to give a reason.
When the broker contacted his aggregator, they also gave no reason for the cancellation, only indicating it was due to his association with someone else.
The broker believes it may be connected with an investigation into his ex-wife’s business, but says this has nothing to do with him and it is unfair he has become guilty by association.
The broker is now trying to get his affairs in order – having to deal with lost trail, refinancing current clients, and finding other lenders to take him on while this is hanging over him.
“The broker loses the relationship with the lender and he loses the income stream and clientele that’s been locked up with the lender. The only option available to the broker is to refinance the clients from the lender, and if he has to refinance within the 12 months, basically he has clawbacks against him as well, so the broker has to wait 12 months before he can refinance the clients,” the broker lamented.
Because there was no clause in the contract which put onus on the lender to give reason for cancelling accreditation, his aggregator reportedly told him the only option to find out why he was discredited is to get a court subpoena.
“The impost is on the broker – the small guy – and the big guys say to go down the legal route. So if you want to find out information about yourself, you have to spend money to get that information. This should not be the case; it should be a very simple process where the contract should have a remedy in case the decision has been made incorrectly,” he said.
The broker said he will have to judge whether it is economically viable to take it to the legal system. “At the end of the day I’m dealing with a bank and an aggregator who can throw as much money as they want at it.”
He contacted MFAA for help, who reportedly told him they had heard of other cases where this had happened but said there is nothing they can do as it is a contractual relationship.
However, when it comes time for MFAA membership renewal, they will do an investigation as to why the broker lost accreditationand if the lender cannot provide a reason then the broker will remain a member of the association.
MFAA chief executive Phil Naylor told Australian Broker
that the best option for anyone in this situation is to contact their aggregator for help.
“My advice, because the aggregator is an important player in this relationship, is to go back to them. Normally that sorts out the problem. If that doesn’t work for whatever reason, the bottom line is would be to get legal advice and sort it out through the courts… [But] if the broker has been terminated within the terms of the contract, there’s not much anyone can do,” he said.
Meanwhile, the broker is facing an uphill battle to clear his name. He believes a mediation process with the broker, aggregator, lender and professional association representatives would be a useful step in the process.
“The banks are acting as God and making the call but nothing can be done about it. They don’t have to be responsible for their decision, they don’t think about the impact it has on the broker,” he said.
“You’ve got the government acting on the consumers’ behalf, but there needs to be something done to protect the brokers too… All I want is to get my name cleared.”
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