MFAA comes out swinging after APRA labels broker loans risky

by Adam Smith27 Jun 2014
The MFAA has dubbed an APRA report misleading for asserting that broker introduced loans are riskier than other channels.

The association has demanded the banking regulator correct its draft Prudential Guide on Mortgage Lending, saying the report contains misinformation and is misleading. MFAA CEO Phil Naylor rejected APRA’s claim that broker introduced loans carried higher risk.

“There is no evidence to support the assertion that third-party or broker loans are any riskier than loans proprietary channel lending we have strong evidence to back up our case,” he said.

To the contrary, Naylor said broker introduced loans were of higher quality based on arrears, approvals and conversion rates. He pointed to both the NCCP and the MFAA Code of Practice, saying they held brokers to a high standard.

“These are stringent rules that come with heavy penalties if problems occur, providing strong protection to consumers at every step of the process. On this basis it is ludicrous to single out broker loans for special attention in the draft guide,” he said.

COMMENTS

  • by marko 27/06/2014 8:38:41 AM

    Sorry Phil but yomy experience supports APRA's view. In every lender I have worked broker-introduced loans had higher incidences of fraud, higher arrears rates and higher loss rates than loans sourced through in-house channels direct to the borrower. Also, ask the mortgage insurers about their experience. Let's see that evidence you are talking about.

  • by Paul NQ 27/06/2014 8:53:22 AM

    I won't hold my breath waiting for APRA to admit their shortcomings and lack of industry understanding. They are bureaucrats they believe they have no shortcomings.

  • by Brian Hastings 27/06/2014 8:53:36 AM

    should do more than just comment. i havent seen anything in the mainstream media. APRA are a joke and should be proven wrong in no uncertain terms.