New data suggests recent bad press has done little to tarnish the reputation of brokers.
With brokers being scapegoated by the lenders and slammed in the press, 2018 has been far from rosy; however, data published in early June shows consumer confidence in the channel is at an all-time high.
Broker activity has doubled since 2008, and brokers are now arranging 509,520 loans per year on average. Consumer NPS results for the broker channel sit at +70; complaints to the MFAA alone are down 78%.
The figures will be presented to both the federal government and ASIC by MFAA CEO Mike Felton over the coming weeks, with the intention of reminding Australia about the value the channel brings – not only to the finance sector but the wider economy. Infographics and marketing materials are also available for brokers to download from the MFAA website and share with their customers.
“While consumers benefit from the service brokers provide, we continue to be criticised as though the broker channel is systemically rotten. So we decided to examine additional real data for answers to bring an accurate presentation to government and to ASIC. The numbers don’t lie,” Felton says.
Complaints to major bodies, such as the Credit and Investment Ombudsman, the Financial Ombudsman Service, ASIC and the MFAA itself have declined sharply (see infographic), and consumer satisfaction is at a record 92%. “We are using relevant facts and actual data to show that the picture being portrayed – one of cultural, systemic issues and poor outcomes – is not accurate as to what is happening in the industry,” Felton tells Australian Broker.
“You see exposure of wrongdoing in the royal commission, and that by nature only focuses on the negative. We would certainly say that there is always wrongdoing in every industry, but we feel the data strongly shows that it’s not at the core of our industry, it’s at the fringe.”
In addition to complaints, that data covers arrears, commissions and industry competition – all of which show a positive outcome for brokers, as well as their customers.
ASIC has already confirmed there “does not appear to be any significant relationship” between the level of broker commissions and arrears. Additional data from Smartline shows that in 2017 the lender paying the highest upfront commission received the lowest share of business through the broker channel of all the big four banks.
“ASIC and Sedgwick found no evidence of systemic harm, and the industry is producing great outcomes because a broker’s entire business model is built on those outcomes,” Felton says.
The non-major lenders also benefit from brokers, seeing an increase of 21.5%–28% in broker-originated loans. What remains to be seen is whether these figures will be considered in any regulatory revisions that emerge over the coming months.
“Our desired outcome is to allow the industry to continue the process [of self-regulation]. The governance framework is self-correcting, self-assessing and self-approving, and we will constantly look at behaviour, remuneration and outcomes and make the adjustments necessary,” Felton says.
“We are comfortable the consumer does not have a deficit of confidence in the broker channel. We have seen in the height of this in the last three months that it has continued to grow. We believe this data will demonstrate to the broker, and the broker’s customers, that the channel is very sound.”