“If you can’t trust your broker, who can you trust?”

by Miklos Bolza27 Apr 2017
“I am in awe of what you do,” said Minister for Small Business Michael McCormack to a room full of brokers in Sydney yesterday (26 April).

At a breakfast event held by the Mortgage & Finance Association of Australia (MFAA), the minister spoke of the challenges and opportunities that brokers face each day from areas such as housing affordability, the banking sector, regulation & government, and innovation.

“I truly am in awe of what you do because I know. I ran my own small business for eight years,” he said.

He expressed his trust in the industry by raising a glass poured by Mike Felton, CEO of the MFAA, and drinking from it, despite Felton suffering from a cold.

“If you can’t trust your broker, who can you trust?” he asked.

Government acknowledgement

“I know and my government knows and appreciates what you do, not just for the small business sector, but what you do for your customers … those people who need finance, those people who need good advice.”

The government acknowledges the importance of mortgage brokers and the service the industry provides to customers across Australia, he said, especially as banks reduce their footprint in regional areas.

“It’s for all those reasons why your industry is so strong and we as a government want to make it even stronger. In the past year, [the industry] has expanded by 4% and brokers now write more than 50% of all home loans.”

“It’s incumbent on government to make the policy settings as easy for you to be able to have that go, to back yourselves, and do what you’ve done so well for so many years.”

In trying to develop the right framework for small businesses such as brokers, the government is always open for consultation and valued stakeholder input, he said.

Bureaucratic overreach

McCormack acknowledged that brokers had to juggle everyday work activities with extra bureaucracy and paperwork, promising that the government would try to cut through as much as it could and pull back on any regulatory overreach.

“If there are examples …of federal government paperwork that you feel is a little bit onerous or … replicated in some other areas of state or local jurisdiction, please let me know. It’s not hard. Just Google my name and flick me an email,” he told the audience.

Remuneration review

McCormack also touched on the Australian Securities & Investments Commission's (ASIC) Review of Broker Remuneration at the end of his speech.

While the review made a number of proposals for tweaking broker remuneration, he noted that it did not recommend government action.

“Instead the industry is being encouraged to provide feedback on implementing these proposals. I agree wholeheartedly with that approach.”

“The government wants to help you and I know you want to help yourselves. I’m particularly encouraged by how the industry, including the MFAA, engaged with the review process.”

He also praised the industry for recognising that greater transparency will produce better consumer outcomes and make the broking industry more sustainable.

Related stories:

Are regulators too concerned about housing?

Broker associations disappointed with Sedgwick

Lack of consumer awareness hurting brokers