Australian Broker forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Choice defends independence

Notify me of new replies via email
Australian Broker | 05 Aug 2011, 02:00 AM Agree 0
Consumer group Choice has come out in defence of its bank switching campaign following widespread criticism
  • timmich | 08 Aug 2011, 03:13 PM Agree 0
    Many years ago our company was asked by consumer group Choice to help a client. The reason why our company was chosen was because we were fee for service, accessing the entire mortgage industry, and received no commissions. Our business model has since changed to commission based and it seems Choices business model has also. Unless Choice are accessing the entire industry of mortgage providers they are simply channeling consumers to a handful via another company and taking a fee for doing so. Shame on you Choice. Hint - I'd consider dropping the 'independent' from my marketing before someone challenges it.
    As for the the One Big Switch AKA Big Bank Switch Campaign - The mortgage industry is trying to improve the standing of Mortgage brokers. Where does a company simply referring people to a 'bank' for a commission fit in? No advice and no support. Easy.
    Perhaps this should have been called the 'One Big Con Campaign'.
  • Ozboy | 08 Aug 2011, 04:34 PM Agree 0
    "When the response from the banks is known and products are presented to consumers, we will publish our fixed fee, which will be identical regardless of the products on offer. The fixed fee will deal with any perception that we may prefer consumers to take one product over another. It will also demonstrate that we intend the fixed fee to pay for the costs of running the campaign, not to produce excessive revenue for CHOICE. Any additional money made over and above the cost of the campaign will be ring-fenced for future campaigning for all consumers," Stace wrote.

    My understanding is that this is against the legislation, that you have to have a referral agreement in place, that the amount of remuneration must be stated upfront and that you must get the person's permission to pass on their information and advise of the "payment" you could/would receive. If this is correct then he has just admitted the breach....very publicly. Hope ASIC is on this and takes the appropriate action.....very publicly!
  • Spinner | 08 Aug 2011, 09:04 PM Agree 0
    Given it takes an average of 5 hours to process a single loan properly, thats 30 sales staff to complete the process in a month. Who pays them? Is the deal they recommend, actually the best deal at settlement given offers from lenders are coming thick and fast? What will the basis for switch be? Should choice direct the consumer to UBank at 6.59%?? (no brokerage or referral fees, no service, no advice). CitiBank at a 3yr fr of 6.79%. If I take Choices lead and switch, then my old lender has a better offer next week, will they refund the referral fee? Do I ring Choice for advise on fixing my loan after I switch?

    Can you guarantee the new lender won't review their pricing over the 30 year loan term given "global ecomonic conditions"?

    Sounds like a fast talking saleman has sold Choice a concept for cash in an industry they don't understand at grassroots.

    They would be better served by encougaging consumers to ask brokers can they get a better deal. Thats what NCCP was all about wasn't it? Disclosure, comparisons, individual circumstances and no room for the new entrant trying to make a quick buck. Plus there is a couple of thousand brokers to help.

    Choice should approach MFAA and FFBA for a more holistic solution via its members. Why switch 1000 mortgages for a fee when you can better empower brokers who can reach 50,000 mortgages in the same time.

    Choice is about consumer information and choice. What you are saying is that Bank's don't give choice. But your also saying that Brokers are either irrelivant or don't give choice.

    If the above is not enough, Choice are also saying ASIC have failed the consumer because they need to step in and save the consumer.

    What Choice will find out of the 1000 responses a couple of hundred won't get approved for reasons we brokers know.

    Nick, if your receiving fees related to outcomes in a consumer advocacy role, you have a conflict. Its not worth it.
  • David | 29 Sep 2011, 10:54 AM Agree 0
    ASIC have stated that Brokers cannot claim to be independant because they accept fees. Seems to me that on that basis alone, Choice can no longer claim to be independant.
Post a reply