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The Mortgage and Finance Association of Australia recently announced that mortgage brokers now settle 76 per cent of home loans – the highest figure ever.
With the record heights reached, Accendo’s Trent Carter is concerned it could result in added scrutiny for the channel as regulators set their sights on a growing market.
“You don’t end up at that number by accident or by fluke. It’s been a concerted effort on the industry to remain professional and be the channel of choice for people who are looking for assistance for loans. So, I think it’s just a massive reflection of the trust that the general population of Australia put in brokers when it comes to sorting out their finance,” Carter said.
“But I think it’s also a bit of a double-edged sword that, with higher representation in terms of introduced loans, we need to be buyer beware that regulators and attention might come on the industry and further scrutiny in the future because that’s what it brings.”
Brokers have certainly faced added scrutiny in recent times that could be a reaction to the success they’re having.
The Revenue NSW, Loan Market, and Finsure have been locked in a debacle for some time now, with the government body claiming brokers working under the brands should be subject to payroll tax.
Brokers have since hit back with some calling the move “unjustifiable” as considering them employees under an aggregator is ridiculous.
Mirroring the thoughts of Carter, a LinkedIn post from Blake Boss said that brokers should expect more scrutiny. While he discusses the US system, the parallels are certainly there.
“While the broker channel experiences rapidly expanding growth, regulatory agencies have turned their attention toward ensuring that this sector remains compliant with federal and state laws … They aim to protect consumers from any potential predatory lending, misleading marketing, or improper compensation practices.”
Further to this, an article from The Adviser discussed how consumer bodies were calling on the Australian Securities and Investments Commission to review broker remuneration in a submission to Senate.
“Over the last decade, there have been a large number of inquiries and initiatives to address conflicted remuneration in the financial services sector. As part of this, payments to bank staff involved in lending and mortgage brokers have rightly come under scrutiny. When financial services staff are incentivised to encourage consumers to borrow more, this can introduce increased risk into our financial system and mean that more Australians take on unaffordable levels of debt.”
“The committee needs to consider how to strengthen protection in this space and how to test if existing protections are working,” the submission said.
Carter said these issues aren’t new and that even looking back to the banking royal commission, these themes were prevalent.
“That will continue and I think that needs to be a bit of a focus on our industry and our peak industry bodies when it comes up to election mode to say, ‘Hey, who’s going to look after the industry’?
“That’s what we want our industry bodies to do, is to be advocating for us and lobbying with the powers that be to say, ‘These guys do a great job, they’re trusted by Australian people.’”
Clearly the consumers are happy, as Carter mentioned that with the Australian Financial Complaints Authority (AFCA), less than 1 per cent are related to brokers.
“So, whilst it might not be a, hey, just leave them alone and get on with it, maybe it doesn’t need to be a constant looking at them to how we over-regulate,” he added.
“There’s a perfect symbiotic relationship for a lot of brokers out there because we get paid on a successful outcome for our clients … Fundamentally, the reward for the broker comes once the job is done and done well. And as long as that may reign, you’re going to see great outcomes from this industry.”
Related: Imposing payroll tax on brokers would be ‘unjustifiable’
