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Watchdog zeros in on mandatory MFAA membership

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Australian Broker | 25 Nov 2011, 07:00 AM Agree 0
The ACCC is seeking consultation on lender requirements that brokers be MFAA members, asking industry stakeholders if the requirements are beneficial or detrimental to consumers
  • Nick | 25 Nov 2011, 09:51 AM Agree 0
    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?
  • Paul Gollan | 25 Nov 2011, 09:55 AM Agree 0
    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.
  • WhistleBlower | 25 Nov 2011, 09:58 AM Agree 0
    ... 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.
  • Garry | 25 Nov 2011, 10:04 AM Agree 0
    The MFAA is all but useless to me. We are governed by ASIC now and the MFAA have almost become obsolete. I say close them down.
  • Rod Palmer | 25 Nov 2011, 10:13 AM Agree 0
    Excellent, this 3rd line forcing is expensive and unproductive. I lose the equivalent of around 2 weeks p/annum getting 30 points. Thats at least 20 sessions plus 40 hours travel to & from. I spend twice as much time getting points as I spend on annual leave. With 35 years experience I don't appreciate having to lose 2 weeks a year attending sessions just to get points to retain my MFAA membership.
  • Prisco Minichiello | 25 Nov 2011, 10:14 AM Agree 0
    Regulators should make up their mind about how serious they are with consumer protection The NCCP act is not perfect but it goes a long way towards legitimising the industry The MFAA provides invaluable advice to members and is an integral part of the professionalism and compliance guidance to Brokers. If the ACCC was to revoke the requirement, I'm sure 99% of brokers would retain membership. seems to me this is a futile exercise.
  • Tony Broker Perth | 25 Nov 2011, 10:16 AM Agree 0
    Its about time - It should not be compulsory at all. There should be choice and by having such choice there will be greater competitiveness and the we the consumer will be better off!!!
  • Scopher | 25 Nov 2011, 10:21 AM Agree 0
    This is a welcome and long overdue initiative from the ACCC. I am not against any professional association however the compulsory membership of the MFAA goes against the notion of freedom of choice. Besides, the MFAA's heavy handed approach to issues such as training through its favoured RTO's etc. is repulsive. With ASIC as the official regulator, it is time that the MFAA took off its hat of self-appointed sheriff.
  • Glen | 25 Nov 2011, 10:22 AM Agree 0
    Having been a member of the MFAA for probably 15 years, I welcome this review. If you look at the benefits that the MFAA is supposed to bring to its members it is hard not to conclude it has failed. I see no reason why MFAA memberships should be compulsory.
  • John McGuigan of Gold Coast Loan Broker | 25 Nov 2011, 10:23 AM Agree 0
    During the 8 years of MFAA Membership, I can honestly say that MFAA was of no benefit to my company but required an annual subscription. Most major lenders required membership with an association for them to consider dealing with the loan introducers. This meant MFAA was receiving a subscription from loan writers while MFAA protected the lenders interest.
    Hooray for ASIC to ask the question. Hopefully now introducers will be regulated by ASIC and MFAA are deemed redundant.
  • bretto | 25 Nov 2011, 10:25 AM Agree 0
    I bet they ask everybody accept brokers! MFAA have long been a useless body, funded by the major banks. They have not handled pressing issues and pass everything off as ' thats a commercial issue between your Aggregator and the Bank' Issues that need to be addressed such as SLA's, commissions, customer churn by the banks themselves, broker deals declined only to be approved direct and compliance burden.... all too hard.
  • Dave | 25 Nov 2011, 10:34 AM Agree 0
    Why lenders place MFAA membership on par with an ASIC/ACL is beyond me. For a very long time I have watched MFAA the "private Comapny" arrange its affairs by cajoling major lenders.

    "pulling the wool" over peoples' eyes has long been their M.O.

    If the MFAA got off its backside, told lenders to remove these enethical requirements somehow woven into the thread of Loan Writer Agreements, the MFAA might actually gain some Street cred.

    Then like the FPA, the MFAA could focus its energies on the develoment of its original service proposition.... but for the life of me, I've forgotten what their offering was?... actually, now that I think about it, isn't the MFAA a part of the CBA ?
  • Robbo | 25 Nov 2011, 10:47 AM Agree 0
    This is absolutely ridiculous! We have had to go through ACL & now we have lenders wanting us to be a member of a body (MFAA) that also caters to the lenders. The lenders have far too much influence with the MFAA (whether the MFAA care to admit that or not) whereas a body genuinely dedicated to brokers such as the FBAA get squeezed out. The MFAA want everyone to have a diploma. That is a peice of paper only. I have been either a broker or a banker for over 25 years now - but the MFAA don't deem this as satisfactory & have this childish beleif that a diploma will change all of this. I beleive that they are too influenced by the banks pushing this agenda. Here's my question to the MFAA. If you beleive that all members hold diplomas - and part of your membership is the banks and lenders, are you therefore enforcing that all bank staff likewise obtain their diplomas? NO! Why not? Because the banks don't want to go through the hassle & costs of having their staff complete the diplomas. As such, how does the MFAA honestly claim to represent brokers to the same degree as they represent the banks. They don't! They are an organisation that is more interested in the banks than the brokers. As such, I refuse to support them. I would much rather be represented by a body who's primary focus is on the broker industry such as the FBAA. Enough is enough. The MFAA run with the foxes & hunt with the hounds. They can't serve two masters.
  • mark | 25 Nov 2011, 10:48 AM Agree 0
    MFAA doomed. Done zilch. Cutbacks and rest.
    If we are governed by ASIC so be it. MFAA is an option not mandatory. I predict 2012 is the beginning of the end. If you are an ACL then we are beholden to ASIC and zero to MFAA or aggregator for that matter.
    Aggreagtors and co start thinking very clearly what you in fact offer an ACL holder going fwd.
  • Skeptical | 25 Nov 2011, 10:50 AM Agree 0
    My business would grow fantastically if I was able to make it mandatory for everyone wanting a home loan to come to me and not to my competition. This is ridiculous.
    ASIC do not make it a condition of licensing to belong to the MFAA.
    How can the Government give preference to one business over another to knock out competition?
  • Nick | 25 Nov 2011, 10:53 AM Agree 0
    Aussie owned by CBA; Mortgage Choice owned by CBA; Wizard owned by CBA. Enough said. MFAA not independent and nver did anything about consolidation just lines up sponsors.
  • Lynne Cox | 25 Nov 2011, 11:00 AM Agree 0
  • Dharam Chetty | 25 Nov 2011, 11:01 AM Agree 0
    Whilst MFAA is seen as the peak body for mortgage brokers, it is dominated by major lenders and I have never seen any financial benefit passed onto my clients. This is even more so since the requirement of the new lincencing regime which i think is the right move. MFAA has not provided me any benefits and I see that this is just creating and adding further cost to delivering a valuable service to the genearl public
  • WP | 25 Nov 2011, 11:28 AM Agree 0
    I see more value in being a member of the MFAA than I do in paying the ASIC for a regulatory system that disadvantages more of my customers than it protects, and forces me to administer some silly rule like have a formal agreement before accepting a referral another professional.

    I suspect this is more about breaking the power of the representative bodies than it is about anti competition laws.
  • Broker | 25 Nov 2011, 11:33 AM Agree 0
    I dumped the MFAA years ago and I can tell you it felt good, perhaps all brokers should do the same, the FBAA is marginally cheaper and they tend to insult my intelligence less!

    It’s a pity that neither organisation brings any tangible membership benefits to the table though; please remind me what exactly is the purpose of these organisations again?
  • ozboy | 25 Nov 2011, 11:37 AM Agree 0
    Agree this should not be a requirement, I would probably still keep my membershit (that's a typo but loved it so much kept it there) but there is no way it should be compulsory. Hey Lynne, relax no need to yell at us we are on your side and it's Friday!
  • Glenn Rodricks | 25 Nov 2011, 11:48 AM Agree 0
    At last someone has woken up to the fact that the MFAA is an un necessary Lender owned and governed body that has no relevance to the professional conduct of a Licensed Credit Rep. It also adds cost to Credit Reps and promotes itself as far beyond its actual significance.
  • Robbo | 25 Nov 2011, 11:49 AM Agree 0
    WP - it would appear from your comment that you are a broker. If so could you please elaborate on what "value" you as a broker receive from the MFAA? I agree with the fact that some of the agreements that we must have are excessive - but there are many other benefits of the regulation that in my opinion outweigh the negatives. The MFAA neither truly represent us brokers - nor do they offer us any true benefit. Maybe I'm wrong - but I have yet to find a broker who beleives that he gets true value from his annual MFAA membership fee. I'm not having a crack at you - I an just don't see how we get any value from the MFAA.
  • Glenn Rodricks | 25 Nov 2011, 12:01 PM Agree 0
    Watching the torrent of comments, I have to say that today is the start of the end of the MFAA, and we should all be celebrating. I urge all the professionals out there to keep this up, and not to stop commenting as ACCC and ASIC will be able to gauge the resentment from the Brokers. I have been with this industry for 13 years and I can say that the MFAA did have a role to play in bringing about some level or professionalism over the last 10 years, BUT with the arrival of Credit Licensing, the writing was on the wall for the end of MFAA.
  • WhistleBlower | 25 Nov 2011, 12:05 PM Agree 0
    MFAA has moved well away from 'core business' ... it has ostensibly done this in order to secure its business model, and, as part of that strategy, has aligned itself with Banks.

    What astounds me continually, is how these situations are left to develop... there is a common thread in all the above comments, and it is the same thread I have witnessed for years in these forums; a thread that constantly asserts itself in the form of individuals who are powerless to affect the status quo.

    This aspect to our industry sent me off to investigate why it was that so many tens of thousands are ignored in favour of the very few (Banks) and what I discovered was not pretty.

    Basically, we are all fodder for Major Banks. The NCCP was essentially constructed by Banking lobby groups based in Canberra, working to ensure legislative change that would serve their own ends.

    The MFAA essentially confirms this through its desire to serve EXCLUSIVELY the relationships with Banks to the exclusion of all loan writers.

    They have recognised that Banks through ASIC and certain Ministers weild all the power, and that it's simply a case of manufacturing a legislative environment whereby you and I have to pay a Toll fee.

    Look at MFAA in how it attempts to strengthen its model through slight-of-hand i.e. Training, Compliance, Annual Memberships, seeking Banking Sponsorship and working tirelessly to strengthen its ties with Lenders.

    Now WP above does make a solid argument in terms of 'value' in comparison to ASIC and the ACL (Wholeheartedly agree) but I would add to that by asserting that factually, this industry has been overtly interferred with by faceless banking groups who, if they can't kill it, will do everything in their power to control it.

    If I were nab, CBA or any other bank, I would have $ billions up my sleeve and play the very long game as well... and that my friends is exactly what is really going on.... we are nothing more than sheep in a very large paddock.... all our bleeting will be for naught in this place, because even this place is controlled by lenders, you just can't see all the angles.
  • Stuart | 25 Nov 2011, 12:34 PM Agree 0
    I can only agree with the 90% of comments above calling for the removal of compulsory membership body affiliation. MFAA have done nothing (aside from some rhetoric around their own lobbying ASIC prior to licensing) to assist my business.

    In 8 years of broking I have never had a client ask me whether I was a member of the MFAA so that they can feel confident in dealing with a reputable broker.

    The only offering MFAA provides is an overpriced training system that I get for free from my aggregator.

    If I didn't need to be a member to retain my accreditation with the lenders then I certainly wouldn't be.
  • Scopher | 25 Nov 2011, 12:43 PM Agree 0
    MFAA wow, after reading all this stuff, I can't help but think that you're starting to look like Gaddafi!
  • Lynne Cox | 25 Nov 2011, 02:48 PM Agree 0
    ozboy that's great - someone is listening anyway LOL!!!
  • WP | 25 Nov 2011, 02:55 PM Agree 0
    Hi Robbo
    Thanks for your response

    I agree with you. I appear get almost no value from the MFAA.

    I had high hopes for the new regulations, but much of it seems very silly, we have a situation where it appears due diligence is going to have to be done by both us and the lender.

    We have a situation where a a client having paid a 9% loan for three years is not considered evidence of being able to pay a loan, but a budget from the client is, even though in 10 years I have never had a client who can actually give me an accurate figure of there expenditure. Some how its not responsible lending to get a 3% reduction in a clients interest rate, if he cannot demonstrate his income and expenses. How can getting a reduction in rate be Not in the clients best interest?

    So the outcome is none of my clients are better off for this legislation (Maybe there is more detail in the paperwork, but that’s it), but several of my clients are significantly worse off as a result of the regulations, as I cannot access finance for them to refinance there expensive debts which not so long ago I could have, or at least had a better chance without falling victim of the ASIC.

    The real value of the MFAA is the stuff we don’t see.
    For example they negotiated that referral sources didn’t have to have a credit license.
    They went to Canberra and lobbied the relevant ministers.

    I was president of a Chamber of Commerce for 3 years, and spent huge amounts of time lobbying local and state governments to get things done, however these are all things the members could not see, and that makes it a hard sell.

    We wouldn’t know what they do, until they stop doing it. Then we might find that the ASIC runs amuck with us.
  • Over there in WA | 25 Nov 2011, 03:31 PM Agree 0
    There is no suggestion that the MFAA holds no value to some. They are free to remain members as volunteers. That doesn't create a case for compulsory membership. The MFAA themselves promte as being a voluntary organisation. Is there anything wrong with them proving value to their members to justify ongoing membership? Any other business has to sell its worth in order to attract customers. Remove the compulsory component and perhaps members will see a significant effort from the MFAA to provide value
  • BRIAN TAYLOR | 25 Nov 2011, 03:34 PM Agree 0
    Firstly I don't think you should be printing comments unless the writer is prepared to fully identify themselves.
    Secondly, all banks should be told by ACCC to eliminate the requirement for MFAA or FBAA membership now that we are all licenses with ASIC.
    Thirdly MFAA should have seen this coming and grasped the bull by the horns a long time ago by providing bigger and better services to their members. Instead of being totally reliant on education they, themselves should have provided many of the aggregation services i.e. the provision of electronic systems to enable brokers to provide competitive quotes (as available through current aggregators and required by ASIC)and the ability to collect broker commissions on behalf of it's members (as the aggregators do now. THIS WOULD ENSURE THE FUTURE OF MFAA AND FBAA INSTEAD OF BEING IN THEIR CURRENT SITUATION. "GET YOUR HEAD OUT OF THE SAND!"
  • Melbourne Broker | 25 Nov 2011, 05:15 PM Agree 0
    The big question is "what value does the MFAA add?" They talk about lobbying and professional standards, and yet we have seen little benefit from the lobbying, and profesisonal standards are now supervised by ASIC and COSL. Professional Development is a joke with MFAA: it is light-weight and does little to improve professionalism. Just read "Mortgage Brief" and see if you can find any articles that deal with a practical subject in depth that assists our professional knowledge. It's all waffle, and about how good the MFAA is, and awards. MFAA does provide indepth CPD but attaches a high price to it as a special education service. Recently we suffered two hours with MFAA directors talking about themsleves and were awarded 2 CPD points for our suffering. What a joke! That was not Continuous Professional Development. But the big problem facing the MFAA is its reliance on the major lenders, and whenever members make representations on issues such as commission cuts, service levels etc. there are only carefully guarded statements for fear of upsetting their major revenue source. It's time we all stood up and told ACCC that this cartel needs to be broken, and make MFAA accountable in providing real value.
  • Paul | 25 Nov 2011, 09:04 PM Agree 0
    It's about time we had something go our way. The MFAA is a rort. Money for nothing, what do they really do for us? very little. Have they had any great success in overturning any ASIC desicions, have they been able to get commission levels lifted back to reasonable levels, have they brought any ingenuity to our industry- I rest my case and look forward to not wasting the $300 plus dollars a year.
  • Confused Broker | 26 Nov 2011, 09:11 AM Agree 0
    I just hope that someone from ASIC is reading some of the excellent and honest concerns that brokers have about MFAA. They are now indirectly influenced by the majors and this is the PERCEPTION that US brokers have. So unless the MFAA comes out and shows us any different then it will stay the same
  • NoDoubleRegulator | 26 Nov 2011, 10:00 AM Agree 0
    No point in having ASIC as regulator and also mandatory MFAA membership. It should be one or the other. I would prefer self-regulation. However, since ASIC is not going to let go, MFAA has to go as a mandatory requirement. People would still be free to become its member of that of any competing organisation such as the FBAA if they feel they can get any benefit out of it.
  • Dave | 27 Nov 2011, 02:24 PM Agree 0
    I have been involved in the finance industry for more than 40 years I did my Cert 1V a couple of years ago I can understand the need for some education for some one entering the industry but for me to upgrade my Cert1V to a diploma is of benefit but to the trainers who have been knocking on MFAA doors to sell their wares. Experiance and the hours upon hours spent at lenders educational days then the 30 to forty hours spent each year to keep up updates then the reading of all the updates from industry bodies and lenders which can be up to 4 to 8 emails per day then a couple of industry magazines per month I can not see what value a diploma is going to add other than to the Bank Account of the Issuer I also hold The old Blue Omega Commercial Loans for Business that was used by several of the Main Banks in the 1990 through to 2005 it probably still exists. this allong with countless hours spent at seminars and updates What does another peice of paper mean

  • Broker in the 'burbs | 28 Nov 2011, 10:01 AM Agree 0
    Yes, I received the letter from the ACCC myself, however I also think this is less about universal MFAA mandatory membership rather, under NCCP & the regulatory control of ASIC, the ACCC are considering whether membership of a trade group should be compulsory in any circumstance?

    Financial Planners are not required to be members of a trade group (e.g. FPA) to operate in their industry, so why should ours given similar licencing and consumer protection laws.

    Both banks and aggregators (who own a fair chunk of broker distribution now) want some measure of control with brokers and the MFAA is a great conduit to flex their industry muscle.

    It will be interesting to see what the ACCC will do after submissions. I know what I be writing about.
  • Terry | 28 Nov 2011, 10:38 AM Agree 0
    MFAA holds no significance to the public or the mortgage broking industry. they are no more that an training facility similar to Kaplan, AAMC and the like. ASIC is the governing body not MFAA. that said, the banks would like to have it that the MFAA is mandatory as it would appear that the banks pretty much control the MFAA.
  • BrokerTime | 28 Nov 2011, 12:02 PM Agree 0
    About time. Sick of complying with requiremnets that don't bring any benefit to my customers.
  • Peter Heinrich | 28 Nov 2011, 12:03 PM Agree 0
    I think membership of a professional body is a good thing for Brokers and the industry. All'professions' with any standing in the community have strong professional bodies representing them - CPA's Financial Planners, Lawyers, Engineers, Doctors why not Mortgage Brokers?

    All throughout the consultation phase of the drafting of the NCCP and ACL legislation the MFAA represented brokers in a calm commonsense way to ensure the regulators didn't over regulate and make the job impossible. Their approach was in stark contrast to the other shrill bodies who got the regulators offside.
    When new regulation comes into being I can always rely on well considered, timely and relevent support material on the MFAA website and usefull templates that most of the aggregators and lenders depend on.
    I note some correspondents object to the CPD hours. They have to do 20 hours for ASIC anyway so there is only an additional 5 for the MFAA as you don't have to separate hours. I personally think the industry is better off with an industry body that is professional and can speak to the regulators on behalf of brokers with authority anfd knowledge.
  • Your a Trainer, Not a Broker | 28 Nov 2011, 02:09 PM Agree 0
    Of course you think that Peter. BUT you are NOT a broker being subject to the compulsory membership. It is easy to see the benefit YOU get from compulsory membership.
  • Martin J. Rollins | 28 Nov 2011, 04:10 PM Agree 0
    Peter is correct in as much as:

    1. We need collective representation

    But, the distinction MUST be drawn between the MFAA and ASIC.

    A few years back I wrote of this and how people should understand the difference between a private company (MFAA) and a law-enforcement agency (ASIC) ... it has worried me that the MFAA has not remedied this 'membership' issue with lenders directly, and I would suggest the ACCC will sort this out directly... we do live in a democracy at the end of the day.

    Regardless of all that (pure mechanics) there is a real need for an industry body with a very real proposition.... and as evidenced by all the above comments, the need for something new will emerge of that I am sure.

    I would conclude by referring to Peter's last paragraph "the industry is better off with an industry body that ... can speak to regulators on brokers behalf..." Peter I don't think people have an issue with that per se, it's more about the relationship issues with lenders that brokers have a problem with, and that same problem has been discussed in these forums for a VERY long time, and yet the MFAA never deals with this issue with their paying-members.... and because they don't, brokers (and me included) believe the MFAA is consciously ignoring the big elephant in the room, and people smell a rat.

    If the MFAA disconneceted from lenders financially (in every possible way) and then built it into their constitution through a transparent process that involved their members, well you might see, hear and read a very different tone throughout these forums.

    The MFAA might be doing wonderful work behind the scenes as you suggested, but if you can't communicate that good work with your membership base with a two-way social media platform (hint hint) and once and for all put lenders (who have their own industry body) on the outer, and brokers/loan writers in the inner circle, then I fear your MFAA is in very real danger.

  • JB | 29 Nov 2011, 08:46 AM Agree 0
    Is there room for more comments you have said it all As for the diploma. where in the study for this does it teach Customer Service, Honesty and common sence. The MFAA need to take a good look at itself, come on the writings on the wall or in these comments
  • Ray | 29 Nov 2011, 09:11 PM Agree 0
    I completed my diploma a year ago and was no wiser for it. A waste of money and time.
  • Patrick | 15 Dec 2011, 02:01 PM Agree 0
    If a lender acting under its own due diligence determines a policy regarding the level of experience, education and/or training required to be accredited with them, provided these standards are equal or greater than the minimum required by ASIC, this is a matter entirely at the discretion of the relevant lender. Given the track record of ACCC and ASIC being unwilling to pursue many problems reported to them and also asleep at the wheel on many other occasions, why would any prudent institution rely of these bureaucrats to manage their compliance policy? If the most practical way to ensure that a particular standard is maintained is to require ongoing membership of MFAA, which itself is conditional upon self regulated higher than miniumum standards, this is just delegation or outsourcing by the relevant lender. Remember the famous words of Ronald Regan: When you are told "We are from the government and we are here to help you" be afraid, be very afraid.
  • Michael | 03 Feb 2012, 05:14 PM Agree 0
    I have been in Banking and as a broker for over 35 years and find the latest requirement from the MFAA of a diploma a complete joke.
    Who is the organisation actually licencing the brokers,I believe that is ASIC not a private business that is only interested in lining its pockets at the expense of its members.
    They had added nothing to my business and are a complete waste of my money.
    Let ASIC do their job and the MFAA should start to see if they can add value to their brokers instead of lining their pockets and trying to remain viable.
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