Brokers to reveal lending data under CIF reforms

by Miklos Bolza13 Dec 2017
A new public data regime involving brokers, aggregators and lenders has been proposed by the Combined Industry Forum (CIF) to promote transparency around competition and promote better consumer outcomes.

The regime comes amongst six principles found in a paper submitted to Treasury in response to the Australian Securities & Investment Commission (ASIC) broker remuneration review and the Sedgwick recommendations.

“[This] is really about using disclosure transparency to produce better informed decisions,” Mike Felton, CEO of the Mortgage & Finance Association of Australia (MFAA), told Australian Broker.

“The main area about that is lender coverage and breadth of choice. That was something that was brought up in the ASIC report where ASIC found that over 80% of business that a broker does is done with four lenders.”

The reporting regime will align closely with what ASIC asked for in its remuneration report and will see individual brokers publicly disclose the following key figures to consumers:
  • A list of lenders available to the customer via the broker’s aggregator
  • The number of lenders used by the broker in the previous financial year
  • The top six lenders and the percentage of business written to those lenders in the previous financial year
New-to-industry brokers who have been operating for fewer than 12 months will not be required to provide figures pertaining to the previous financial year.

“That means calculating this once a year at the end of the financial year and using that data for a full 12 months but also making it available to consumers,” Felton said.

The CIF’s public reporting regime also involves aggregators and lenders who will provide ASIC with crucial lending statistics.

Aggregators will need to supply a list of all lenders on their panel and the percentage share of business written with each during the previous financial year. They will also need to supply the following information on their registered brokers:
  • The percentage of brokers using three lenders or less
  • The percentage of brokers using between four and seven lenders
  • The percentage of brokers using eight or more lenders
Finally, aggregators will also need to supply the weighted average commission rate percentage earned in the previous financial year for residential lending.

Lenders on the other hand will need to provide ASIC with the weight average pricing of home loans across different distribution channels throughout the previous financial year. Specifics of this will be defined at a later date once a standard model has been agreed upon.

The CIF’s public reporting regime is set to be implemented by the end of 2018.

Related stories:

CIF to update commission model by 2018

Consumer groups welcome CIF reforms

CIF releases broker remuneration reforms

COMMENTS

  • by Bottom Line 13/12/2017 9:31:17 AM

    So in essence.....more red tape, less money, more reporting, for the one section of the finance industry that isn't getting the consumer complaints.
    92% of complaints are directed at the banks direct channel; but they give up nothing, change nothing - according to these meetings. They change nothing of their process....and will make more money due to commission changes. Consumers will get serviced less, as Brokers losing more money, will have to start cutting back on the time they spend with each client.
    ......the spiral downwards of this great nation continues....

  • by Steve McClure 13/12/2017 9:47:21 AM

    There are serious concerns about this whole process, not just limited to this issue. Neither under law nor the very rigorous legislation that lays over the top of it, is the definition of a broker defined by the spread of lenders. The loan most not be unsuitable, reasonable enquiries made etc., etc. NOW, we will have yet another layer of compliance and reporting from a self proclaimed body that seeks to tick a box that isn't even there.

    The CIF (did you vote for them?) is looking to further laden our industry with burdens that will complicate and take further time away from face to face with clients. It's what we do best, having achieved a massive 55%+ market share, which started from zero not too many years ago.

    ASIC, you are most welcome to view my compliance plans, credit guides and examine the quality of outcomes I deliver to clients. I have embraced legislation and have been a diligent student of the Act. Meanwhile, you have store credit card and car dealer finance providers, evading key responsibilities because of holes in the legislation. You have banks that charge higher rates to existing customers over new, profiteering excessively from rate margins on investment portfolios, random pricing and deplorable service standards. However, apparently its the professional mortgage broker that has to modify their behaviour.

  • by RobR 13/12/2017 9:51:20 AM

    I already have:-
    1. ACL Number.....listed with ASIC
    2. MFAA Member Number.....listed with MFAA
    3. COSL Member Number.....listed with COSL
    4. Broker Number.....listed with my panel of lenders
    Will this new system do away with all these multiple levels of numbers to provide one single identifier of ME ?