has defended brokers after the Customer Owned Banking Association (COBA) took aim at the third party channel in a submission to the parliamentary inquiry into home ownership.
In its submission, COBA claimed that brokers “fall a long way short” of delivering the best result for consumers because consumers incorrectly believe that mortgage brokers have access to all products from all lenders in the market.
However, the chief executive of the FBAA
, Peter White
has come out in defence of brokers, saying that these comments are naïve.
“The comments about brokers are a little bit narrow-minded. It was finance brokers in the early nineties that for the first time in Australia’s lending history actually bought choice to the customers. Without that, you were always at the dictatorship or the bank or the building society or the credit union,” he told Australian Broker
“So to turn around and criticise and say brokers don’t represent all lenders, well the whole world knows that. It is on the credit guide as to what lenders are on their panel. It is on their website as to what lenders are on their panel. It is a legal disclosure upfront in the credit guide.”
The assumption that brokers should have access to all products from all lenders in the market is also just ignorant, says White. Plus, brokers do have access to more products than the individual lenders do.
“It would be fairly ignorant to think that a broker would [have access to all lenders] because the reality is you physically can’t. It is a practical common sense – how can you represent every lender in the country?
“If you walk into one bank, they can’t tell you that the bank down the road has a better deal. They can’t tell you that. A broker can if they are on their panel.”
White has also warned the association not be the kettle calling the pot black, after COBA claimed that current arrangements around how mortgage brokers are incentivised can cause a conflict of interest.
“The vast, vast majority of brokers in this country are delivering a brilliant service to borrowers and getting them what they want, not trying to push them into something they can’t afford, because that would be a breach of their responsible lending obligations. You have also got servicing issues as well, so if the consumer can’t service the debt it is not going to get approved,” he told Australian Broker
“They have got to be careful of being the kettle calling the pot black because the vast percentage of bankers in this country would have some sort of incentive to ensure they write volume – whether that means meeting budget and what happens if they don’t meet budget. That is still an incentive; it doesn’t have to be monetary based.
“The reality is that is what the world revolves around. It doesn’t matter what industry you go to, there is some incentive to keep you performing. People want results because they are running businesses.”