Mortgage franchise chief dismisses talk of systemic ‘mis-selling’

by Paolo Taruc16 Feb 2017
Mortgage franchise Aussie's chief executive James Symond has dismissed concerns of systemic ‘mis-selling’ in the mortgage broking industry.

Brokers’ power in the $1.5trn mortgage market could rise towards 70% of volumes in “the next three to five years” from about 52%, he said, as reported by The Australian.  

Nearly a third (32%) of customers who secured a mortgage through a broker misrepresented at least part of their application, a UBS survey published last year revealed. Of that figure, more than half said their broker told them to do it.

“We believe banks need to tighten underwriting standards via the broker channel, even at the expense of near-term market share,” the UBS report said. 

However, Symond said there remains the possibility of one broker doing wrong out of “zillions” out there. “In any industry there is, but I don’t believe there is a systemic issue in the mortgage broking industry of mis-selling because of commissions,” Symond said, as quoted by The Australian.

Although brokers earned more for larger loans, they had the incentive to make sure the market was healthy by not having a salary to fall back on, he added. He said 99% of brokers in Australia are commission only. “If their customer isn’t happy, if the loan doesn’t get settled, if the lender is not satisfied — the mortgage broker doesn’t get to eat.”

Symond said bank lending standards were the strongest he has seen in 25 years despite a surge in investor lending over the past six months, and customers were being assessed on interest rates of at least 7%, according to The Australian.

“I’ve never seen lenders take more care, check deals more heavily, ensure the customers’ safety is paramount and that’s the case with all lenders.”

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