Watchdog zeros in on mandatory MFAA membership

by Adam Smith25 Nov 2011

The ACCC is seeking consultation on lender requirements that brokers be MFAA members.

In a letter obtained by Australian BrokerNews, the competition watchdog has said it will undertake a review of finance companies' requirements that brokers align themselves with the MFAA.

The letter, from ACCC adjudication branch general manager Richard Chadwick, was sent yesterday to around 70 industry stakeholders, including the major banks, ASIC, the FBAA and several aggregators.

Chadwick noted in the letter that Aussie Home Loans, Virgin Money, ING Bank and Mortgage Choice had in place notifications requiring that brokers dealing with the companies hold MFAA membership. He wrote that the ACCC could revoke these notifications at any time "if it determines that the conduct to which the notification relates no longer delivers a net benefit".

The ACCC has called on industry stakeholders to offer comment on "the likely public benefits and effect on competition" of the requirements, as well as "any other public detriment".

MFAA chief executive Phil Naylor told Australian BrokerNews the letter was likely sent as part of a regular review of such arrangements.

"Under trade practices law, if you have an arrangement like that authorised, you have to apply to the ACCC. The ACCC hears arguments from all parties, and their decision was yes, it was legitimate. From my understanding, those arrangements are not given in perpetuity, so this is probably a review, and the arrangement may continue or the ACCC may make another decision," Naylor said.

COMMENTS

  • by Nick 25/11/2011 9:51:59 AM

    Taxpayers money at work....surely there are more pressing issues than whether being a member of an industry body is Anti-competitive. Are all solicitors not members of the law institute, are all accountants not members of one of the three professional bodies?

  • by Paul Gollan 25/11/2011 9:55:36 AM

    Personally I see the value in being a member of an industry organisation such as the MFAA, however the time has come for regulators to force any bank who requires industry membership as a requirement to hold an accreditation to remove this requirement, now that all brokers hold either an ACL or authorisation under an ACL. Many brokers see industry membership as simply another layer of unnecessary expense and the time has come to respect their right to NOT be a member of an industry body.

  • by WhistleBlower 25/11/2011 9:58:10 AM

    ... and the World is flat !

    I can't believe people are leetting this slip through without comment.

    ASIC is the law... An ACL is all that is LEGALLY required. If you even let this topic have oxygen, you will be essentially giving MFAA the legal status that ASIC holds, have you got rocks in your head.... hate to bring 'the facts', like the biggy in the room 1) ASIC is a legal authory and the MFAA is a company engaged in profit making.

    The extention of this stupid situation would be to let Police make up laws as they drive around in their cars... and why not just throw democratic systems of governance into the toilet in favour of 'Hec, just make it up as you go along'.

    The ACCC is 100% correct in sticking banks and aggregators on notice... because, there's this little thing called 'Democracy' and 'Governance' at stake.

    No wonder people argue that this industry is full of cowboys.... when you have a Company like the MFAA working hand-in-glove with lenders to pull the wool over the eyes of loan writers, just so they (The MFAA) can protect its annual membership revenues.

    Cowboys and Money, two peas in the same pot.