In its final report, the Murray Inquiry has recommended that mortgage brokers be required to disclose when they are owned by a bank. Despite this recommendation attracting some criticism from the industry, one association head said this can be an advantage for brokers.
FBAA chief Peter White
told Australian Broker
that while the disclosure requirement may influence some consumers’ decisions, it also puts the broker in a position of power to change the discourse around the bank ownership debate.
“I actually believe if a broker is up-front about ownership – let’s say they are owned by Commonwealth Bank, for example – then they can sell that as a positive. It can allow them to change the discussion around bank ownership – isn’t it a good thing that they have somebody so strong sitting behind them that has enabled them to grow as a brokerage and a business?
“Given the way the NCCP is written it doesn’t make any difference to the actual service or advice given, but now they have opened up the discussion with their client and they are able to explain what bank ownership really means and how the NCCP governs a broker’s independence.”
White says although disclosure requirements may mean brokers have to be more on the front foot, it shouldn’t worry them.
“It may mean that brokers are going to have to step up a little bit and sell that independence if customers believe that bank ownership creates doubt around the independence of the advice. That may create angst for some, but it shouldn’t. If you know what you are doing and you are confident about your service and you believe in your skill set and your independence, then it isn’t hard.”
Despite some of the criticism echoing through the industry, White believes that when it comes down to the bottom line, disclosure is always going to have a better outcome than non-disclosure.
“We are concerned that non-disclosure may lead to wrong perceptions about the broking sector. Information is empowering and leads to consumer confidence,” he said.