Major bank unveils new accreditation standards

by Miklos Bolza14 Dec 2017
Commonwealth Bank of Australia (CBA) has unveiled a new broker model which includes stricter accreditation standards that aim to promote greater broker knowledge and positive consumer outcomes.

From 2018, new mortgage brokers will be required to meet enhanced education requirements in order to write CBA loans. The measures are part of the bank’s new broker model and follow the release of the mortgage broker reform package by the Combined Industry Forum (CIF).

“We played an active role in the industry forum and we’re really pleased with how it landed. The need overall for the industry to lift has landed quite well and obviously all the industry participants are of the same view,” Matthew Dawson, CBA general manager of home buying distribution strategy, told Australian Broker.

As part of the bank’s incoming model, new brokers will be required to meet the following standards to gain accreditation:
  • Hold at least a Diploma of Finance and Mortgage Broking Management
  • Be a current member of the Mortgage & Finance Association of Australia (MFAA) or the Finance Brokers Association of Australia (FBAA)
  • Be a direct credit representative or an employee of an approved aggregators, head group or Australian credit license holder
  • Have at least two years of experience writing regulated residential loans
Brokers will be put under additional questioning during the accreditation process with more scrutiny on the individual, the company they work for, the head group that they’re partnered with, the quality of their business and how they have been operating.

“[This is] so we really understand who the person is that we’re dealing with and that they are in fact qualified to be able to operate and represent, not only our brand, but the industry to ensure these new standards,” said Sam Boer, CBA general manager of third party banking.

One of the most significant changes has been the addition of the two year requirements for new brokers, he added.

“Two years has actually always been the policy but what we noticed that there was a lot of different mentoring standards being applied and we felt that this really needed to be improved upon.”

CBA had decided to take a firmer position around the two year time limit, he said.

“You wouldn’t expect to see too many exceptions to that rule but what we’re seeing in recent times is that basically every accreditation has been an exception.”

Those joining the industry will need to go through a more rigorous training program and gain the right experience before they could write CBA loans, he added.

It’s important for new-to-industry brokers to partner with good head groups and establish brokerages and form a solid mentor relationship, Dawson said.

Feedback from across the industry

These new standards have emerged out of the CIF reforms as well as a consultation process across CBA’s third party network which entailed a survey of 2,000 brokers, focus groups with brokers and meetings with head groups.

“We formed a view based on the Industry Forum and then the work that we’d done in our own consultation. We just felt that this was an area in which there was more work that we wanted to do,” Boer said.

The changes were a great opportunity to improve both education standards and the experience for brokers in terms of new accreditation, he added.

CBA had been listening hard to its business partners, Dawson said.

“We’ve currently got over 13,000 accredited brokers at CBA and this is a comprehensive reform program. There’s a lot of change, a lot of complexity, being added back in. The expectations on our brokers now to get it right around responsible lending as well as around customer outcomes – we really need to work with them.”

The new accreditation process will be launched in the first quarter of 2018 with CBA working closely with brokers who meet the new requirements. This includes conducting interviews and supplying support with its professional development plans.

Further accreditation will be on hold until the new processes are brought in to ensure the entire model is implemented effectively.

CBA has also said it will be reviewing its non-monetary benefits for brokers to ensure they provide good consumer outcomes. This includes improving the value proposition for accredited brokers and rolling out CIF’s proposed changes to commissions and KPIs. More details about these changes will be revealed in 2018.

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COMMENTS

  • by sceptical broker 14/12/2017 11:14:54 AM

    Does this smell of CBA thinking they are above other lenders? You guy go learn your trade on other "lesser" banks and when you're up and running we'll support you... If every lender adopted this strategy it wouldn't be much fun for the newbies.

  • by Jeff 14/12/2017 11:53:14 AM

    CBA can make all the changes they want, I'm yet to write a loan with them as they have yet to offer a loan better than there competitors for my clients.

  • by Hold up a mirror 14/12/2017 11:58:50 AM

    Hold on a minute just completing my overseas transfer via a CBA ATM it needs less scrutiny than becoming a broker even though I am a financier sending money to a terrorist organisation.

    I see the Head of 3rd Party Distribution at CBA is still AWOL.