A broker and former industry representative group head says current broker associations are not doing enough to help brokers who are “too scared” to speak out about problematic issues.
Maria Rigoni, former head of Australian Institute of Professional Brokers, said the MFAA and FBAA are too cosy with lenders to make them accountable and bring more competition into the market
“They don’t really take ownership of issues which are hurting brokers. I do believe that everybody has a right to be treated fairly and there should be consequences for big organisations. There’s a reason that brokers are sub-contractors – because it means they haven’t got any bargaining power.”
The lack of action from industry associations, aggregators and lenders over clawbacks is an example of how the broker’s voice goes unheard, said Rigoni.
Even brokers petitioning the lenders to ease clawback practices will have no impact, she believes.
“Who’s going to make [lenders] accountable? Even by doing a petition, obviously they’re just going to sit back and ignore it. They’re going to say ‘we don’t have to do anything and we can let these people whinge and cry and we can just be silent’. And if [lenders] are silent for long enough then it will just be pushed back under the carpet. That’s the reality of it all.”
Brokers do not have enough support behind them to feel secure in criticising lenders, Rigoni said.
“A lot of brokers out there will not speak out, because they know who provides them with the money and do not want their livelihoods taken away from them. They’re too scared – they realise something is wrong that needs to be addressed and fixed, but on the other hand, what is it going to cost them?”
Rigoni intends to submit a paper to the Financial Systems Inquiry after being disappointed that neither the MFAA nor FBAA mentioned clawbacks in their submissions.
She said of the FBAA's submission
: “LMI does not affect brokers. From a perspective of making a big noise about all that, how does that help the broker put food on his table?”
But FBAA chief executive Peter White rigorously defended any suggestion his association is not on the side of brokers.
“To say the FBAA supports lenders and not brokers is laughable and no-one today has ever accused the FBAA of such… We have always taken a very public stance that we do not want lenders as major financial corporate sponsors so that our voice is never constrained or compromised by ‘big bucks’.”
White said FBAA chose to focus its submission solely on LMI so as not to cloud the issue with anything else.
“LMI is the single biggest impost to refinancing a client from one lender to another if they are in the LMI bracket, and any broker who writes home loans would know this.
“FBAA are dealing with real issues that will assist real brokers in the real finance broking marketplace and for borrowers.”
Such issues included discussing with Treasury and ASIC about the potentially unnecessary extra disclosure documentation, and unfinished business regarding the NCCP Act, he said.
MFAA chief executive Phil Naylor also strongly disagreed his association was not acting in the best interests of brokers.
“The most common concern coming from brokers – not the major lenders – is the lack of competition in the lending sector. Without strong competition in the lending sector the broker proposition is greatly devalued. We have aggressively made that point to many government inquiries and to the FSI.”
Naylor said MFAA’s position on clawbacks had already been explained and “well understood” by members.
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