Broking industry faces consumer awareness problem: report

There is a major consumer awareness issue when it comes to the mortgage broking channel, according to a report by a major bank



There is a major consumer awareness issue when it comes to the mortgage broking channel, according to a new report released by NAB Broker.

The report, Engaging consumers and empowering brokers: Essential knowledge on today’s lending market, released yesterday by NAB Broker in partnership with Genworth and RFi Group, revealed some telling statistics about consumer sentiment towards the third party channel.

According to the report – which surveyed 1,000 aspiring home buyers and broker applicants – over one third (35%) of prospective homebuyers were unlikely to use brokers because they had not even considered it. 

“That is an awareness thing,” NAB Broker general manager, Steve Kane said at the release of the data.

“That is really quite interesting given 52.5% of mortgages are done through brokers so there is an enormous opportunity around awareness in the marketplace for brokers. [The broking industry] is quite insular – we know everything that goes on it but do we still get out to the wider public in the sense of this is what mortgage broking is actually about?”

Further, almost half (47%) of those likely to use a broker expected to pay a fee – a statistic which Kane says is also very telling.

“There are brokers that charge fees, there is no doubt about it – probably around 15% of the market – but to think that half of the respondents thought that they would have to pay a fee if they go to a broker once again shows that the actual selling proposition and customer value proposition to the wider market is not clear.”

Whilst Kane says the onus of promoting consumer awareness falls on everyone – lenders, associations, aggregators and brokers – he said that the MFAA and FBAA should be taking a lead role in promoting consumer awareness.

“…[A]s the industry matures, groups like the industry peak bodies need to take a lead role in doing this sort of thing. I think that is where they should put their emphasis and it’s really about developing the professionalism of the industry by making available the training and methodologies,” he said.

However, the report revealed that brokers need to take more responsibility in ongoing consumer education, once a consumer is directed to the channel. According to the report, one in five (21%) ‘dissatisfied’ respondents said that they had not been contacted by their broker after taking out a loan.

“It did surprise me a little bit that the numbers are so high about [brokers] not communicating to their customers. To me, every big institution spends lots and lots of money, effort and time communicating with customers. NAB and all the other banks are a brand, they are a branded proposition. But brokers, where the vast majority do not have a brand, you would think they would be spending all their time having secured that customer making sure they keep that customer,” Kane said.

“At the back-end, [NAB] see a lot of customers coming to us saying they want to do this or that and we try to be very, very transparent and look after the primacy of the relationship that the broker has, so we ask ‘have you spoken to your broker about this’ but [the broker] hasn’t spoken to them in about three years since they wrote the loan. It is a common theme. 

“We have a pilot going where we have been contacting customers and we have saved a significant amount of trail for a significant amount of brokers simply because we have acted in keeping the broker’s primacy and keeping them front of mind... It really is interesting that many customers are saying they really need to do something now but their broker hasn’t spoken to them so they don’t even know if they still exist.”

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