The MFAA has sat down with APRA to defend the broker channel and educate the regulator on the role and importance of brokers in the finance and lending market.
The chief executive of the MFAA, Siobhan Hayden, told Australian Broker
she met with the banking regulator this week to start an honest, open and collaborative relationship between the regulator and the broker channel.
“Primarily, we are not a customer of APRA, they don’t directly engage with me as a stakeholder because they deal with ADIs from a deposit-taking perspective. So, I proactively organised to meet with them to say we are not a direct customer but it would be nice to be further engaged in your policy and thinking and submission process.”
Whilst the meeting was not organised as a direct response to comments APRA chairman Wayne Byres
last week made about broker loans being of “higher risk”, Hayden said the meeting was timely and she was able to clarify this.
“Given the timing of our meeting and the timing of Mr Byres’ comments, I basically did have a chance to further discuss that with them. It was clarified to me that the commentary was more aligned to the types of customers that walk into a teller versus the types of customers that deal with a traditional finance broker – and that being of a riskier nature,” she said.
“What they were suggesting was that interest-only or investor loans are inherently riskier than a traditional principal-and-interest over a 30-year term. I accept that that is a reasonable comment. It was not direct commentary around what channel was riskier pertaining to default or arrears. [Brokers] are required from an educational point of view to assist clients that have a more complex nature.”
Hayden told Australian Broker
it was also an opportunity to illustrate the rigour around the broker channel, the importance of the MFAA and the difference between the financial planning and broking industries.
“It was a fantastic opportunity to elevate what we do at the MFAA. We talked about us being a leading industry body, due to having a higher educational requirement i.e. a Diploma. We also talked about how we require a minimum of 30 CPD hours, not 20, which is the requirement from ASIC.
“We talked at length about having a tribunal at an arm’s length of the association – so any allegations of inappropriate behaviour from a consumer or fellow broker is fully investigated. [APRA] was not aware of that. I said we are, where possible, self-regulated. We have an open and honest and very fluid relationship with ASIC and they admire some of the things we are doing to manage ourselves independently of ASIC where required.
“All of these things were really informative for them. They were also pleased to discuss the differences between our industry and the financial planning industry and the recommendations under the FSI, such as a register for financial planners. I said I understand that is supported because [financial planners] don’t have compulsory membership of associations, but [brokers] do. They inherently don’t know who are running around as financial planners. It was nice to have an opportunity to delineate the differences.”