Report a comment

Broker, congratulations on your 11/12 posting where you say "It's easy to say don't use them , and support non-bank lenders,( I try to) but I also feel obligated to place my clients in the most cost effective loan to suit their requirements." This comment recognises the fundamental value proposition that brokers offer to their clients - i.e. their independence and ability to offer impartial assistance in getting the best home loan for the client.

Comments such as "How about aggregators limiting the majors. Lets support those that support us." and "Its simple then, boycott the big 4. Look after yourself and write with nonbank lenders that will ensure your trails are paid.", demonstrate one of the fundamental problems with the broker industry (which has been reinforced via survey results over the years) which is that some (most?) rokers are more concerned with maximising their commissions rather than serving their clients' best interests. Don't you think it is hypocritical to criticise the banks for profit maximisation while at the same time beating your chest about directing your business elsewhere to maximise YOUR profits?

I know from deep experience that the broker channel has been, for many years, unprofitable for most lending products and most lenders. The only way for brokers to remain relevent is if they offer the lender a distribution channel which costs no more than their own internal distribution channels (branches, call centre, internet, mobile lenders etc.).

Three things the broker industry must do in the future to remain relevant:

1. Genuinely act in the best interests of the client, regardless of the commission rate being earned and who is offering it.
2. Cut out the fraudulent conduct, falsification of documentation etc. that forces lenders to spend time and effort validating what you submit.
3. Submit deals which are complete, properly documented, and which satisfy the lender's product and credit criteria.
4. Make sure that you have sold the client the right loan to meet their needs - a large proportion of borrowers switch loan products within the first year because the product they were sold was not properly explained to them.

Brokers need to face up to the fact that the world has changed this year, and lenders will not be chasing outright volume - they want quality ahead of volume.

And by the way, why is is that with the demise of the non-ADI lenders, the banks' market share has increased while the market share of the other ADIs (building societies and credit unions) has not increased to anywhere near the same extent? If the big 4 banks are really that bad, then why are brokers not moving all of their business to these alternative ADI lenders who offer the same (often better) products rates and service?