In a letter to its members, the Mortgage and Finance Association of Australia (MFAA) has highlighted the positive impact brokers have on the lending market, quoting new data that confirms a customer satisfaction rate of 92% and a reduction in complaints of 78%.
The industry data, based on figures released last week, highlights a series of positive trends which MFAA CEO, Mike Felton, will present to both the government and ASIC.
“While consumers benefit from the service brokers provide, we continue to be criticised as though the broker channel is systemically rotten. So, we decided to examine additional real data for answers, to bring an accurate presentation to government and to ASIC. The numbers don’t lie,” Felton said.
According to the figures, complaint volumes to major bodies have declined sharply over recent years. While brokers represent 91% of Credit and Investment Ombudsman (CIO) membership currently, complaints against them account for only 6.1% of the total volume received last year – a near 50% reduction on 2008 figures.
Further, brokers account for 1% of complaints to the Financial Ombudsman Service (FOS) and ASIC has made 15 broker convictions between 2010 and 2017, representing one in 9,000 brokers per annum.
Assessing its own complaints data for 2008 to 2017, consumer complaints declined 78% to what MFAA terms a “negligible 55 per year”. The body expelled, cancelled or suspended the membership of 75 brokers over the same period. In 2017, there was less than one consumer complaint for every 21,000 new contracts and the consumer Net Promoter Score currently stand at +70, with customer satisfaction at 92%.
“If our industry was systemically rotten you would have complaints and arrears going up, competition and consumer support declining and you would have interest rates rising. We have a very different picture,” Felton added.
In the first three months of 2018, the broker share point increased 1.7% year-on-year, from 53.6% to 55.3%. Further, in 2017, the major lender paying the highest commission received the lowest market share of Smartline’s business among the four majors.
“It’s a phenomenal performance,” Felton continued.
The message, delivered first hand by Felton during the association’s recent roadshows, also comes in response to recent bad press that has emerged during the royal commission, although he maintains it is not a direct response.
“The first thing to say is that this is not an attack on anybody. This is to say the rhetoric and debate in the public realm has been, of late, predominantly negative and is not consistent with the significant ASIC and Sedgwick reviews, our knowledge and understanding of the industry, and our own research,” he said.
Helping brokers to leverage the positive trends, a series of marketing materials will be made available on the MFAA website to enable members to share the information with their customers.
There are currently 17,000 brokers in Australia and from 2008 to 2017 the average number of loans originating through the channel reached 500,000 per year. In the last four years, the market share for non-major bank lenders has increased from 21.5% to 28%, driving competition and improving customer choice.
“We believe this data will demonstrate to the broker and the broker’s customers, that the channel is very sound,” Felton added.