Banks will soon be able to access more information on their clients' credit history and that's good news for brokers. We speak to Sam White of Loan Market and David White of Australian First Mortgage for their thoughts on what the legislative changes will mean for the mortgage industry.
Video transcript below:
Donna Sawyer, Australian Broker TV
Donna Sawyer: Banks will soon be able to access more information on their clients’ credit history following recent changes to privacy laws. That’s good news according to Australian First Mortgage’s, Managing Director, David White, who says the move will allow lenders to make a thorough credit risk assessment .
David White, Managing Director, Australian First Mortgage
David White: The changes will actually make our credit decisions a bit more reliable in the sense that we don’t have to rely just on the customer’s memory. We have a lot more information at our finger tips which will enable us to make a better credit decision on the grounds that we’ve got more information to make that decision. Therefore, approving the right credit for the right people to keep or make, to ensure that we are not putting the client into any undue pressure or stress.
Donna Sawyer: And that’s great news for brokers. Sam White of Loan Market says the role of the broker will be crucial as lenders become more selective with clients.
Sam White, Loan Market
Sam White: If consumers actually have more the history that’s seen by the lender, some lenders would want those consumers more and some lenders will want those consumers to a lesser extent. What that means is that we will see a polarisation in the marketplace or more differentiation in the market and that means that brokers will need to add more value to different clients. It will be more valuable to people because the situation will be maybe more complex than what it is today and that I think is good for brokers who really want to add value to the customer.
Donna Sawyer: With the onus placed on consumers to get their credit history in check, it’s likely the broker will have to take on the role of educator.
Sam White: I think brokers have a broader responsibility to consumers to really educate them on a lot of financial matters and this is one of them. I think yeah, making sure that people understand what happens if I do miss that Telstra bill, buy a vehicle, if I don’t pay that small bill, what effect that can have on their [credentials] and so I think we are going to see brokers, good brokers really adding more value to customers by providing better education and where’s that’s true there are no loan education portals whether it’s face to face, whether it’s through seminars, I think there is a bigger opportunity for brokers to be seen as the consumer advocate than as a consumer educator what’s going on.
David White: I think the brokers will need to educate their customers that, regardless of the type of credit they are taking out, whether it be motor vehicle finance or a 30 day account, just to make sure that they are paying their bills on time. Customers can pay a little bit late, a day or two that does not mean that they are bad people and people that don’t need to have credit lent to them, but they just need to ensure that they making their bills on time because in future a lender can list an account overdue even if it’s for 2 or 3 days. So yeah brokers need to make sure that customers are aware of that and that the customers meet their obligations and their credit contracts.
Donna Sawyer: This is Donna Sawyer reporting for Australian Broker TV.