The broker industry has been wildly scrutinised over the past year regarding the lack of positive consumer outcomes. The MFAA is determined to refute this rhetoric with an abundance of proof that brokers are energising competition.
The Mortgage & Finance Association of Australia (MFAA) has garnered information from several sources that they will use to challenge the negative rhetoric about brokers.
The broker industry has come under fire from the Productivity Commission, the royal commission, a few consumer groups, and the media as they try to paint brokers in a negative light.
The Productivity Commission has been seeking potential recommendations for reform in the sector and the royal commission questions the potential of possible conflicts of interest and broker renumeration.
The association recently introduced a data package that contains evidence to rebut the negative reports and allegations to regulatory agencies and the appropriate government departments.
They also emphasised the ASIC’s review of broker renumeration that failed to include how the upfront and trail commission adversely impact consumers.
Mike Felton, MFAA CEO, explained to The Advisor, “Scrutiny of our industry is relevant and proper. We are a systematically important industry and you would expect scrutiny of such an industry. We do, however, say that the public debate and the rhetoric that you get is very different to where ASIC landed, to the data, and to the industry we know and understand.”
Mr. Felton continued by stating, “There has been criticism of the industry and we think that comes from some with entrenched interest that would have something to gain from a reationalisation of a broker channel and also from those who are misinformed.
“Brokers know and understand the industry and the outcomes that they are delivering week and week out for their customers. So, to be presented with a very different picture, that creates great concern and frustration because they don’t recognise it as their industry. That is not their brokering industry.”
“When there are two mismatching pictures being painted, it creates a lot of cognitive dissonance. You have a lot of stress as a result of this mismatch between what you know is true of the industry and what is being said about the industry elsewhere.”
“If the brokering industry were systemically broken, you would have complaints and arrears going up and you wouldn’t have consumer support of the channel, or competition Increasing. You would have a very different picture to the one that emerges. So, we would argue very strongly that poor consumer outcomes are not a core for our industry. And this data shows that.” Felton added.
Research Data Pack Findings
The MFAA put together statistics from a variety of sources, including the ASIC’s broker renumeration review, MFAA data, royal commission data, and figures from the Financial Ombudsman Service (FOS) and the Credit and Investments Ombudsman (CIO).
It contains spectrum of tables and graphs that show, amongst other discovery, that:
Over 50 per cent of residential mortgages are started with brokers.
The number of FOS and CIO complaints have dropped as the broker numbers rise.
There has been a decline of 78 per cent over the past 10 years in MFAA complaints against brokers.
Brokers are enhancing competition by bringing more loans to lenders external from the big four and away from major banks.
The aggregator information shows brokers secure a Net Promoter Score of +70.
Brokers are not persuaded by commissions, as evidenced by Smartline’s royal commission submission.
According to Mike Felton, “The Productivity Commission has asked for data and we believe this adds to the body of data. The evidence shows that: the industry has; doubled in size; satisfaction is up with phenomenal Net Promote Score of +70; despite broker number s growing strongly, and brokers making up 91 per cent of CIO members, they only made up 6 per cent of complaints.
And for the FOS, less than 1 per cent of complaints between 2013 and 2017 were about brokers That is an amazing accolade for the industry, it is phenomenal.”
Felton continued, “So, there is a great satisfaction and you have these external reviews which show there are no systemic issues and then you look at arrears and compliance and it is even more stark that there are no major problems.”
“Couple all this data with the values that brokers offer – from choice to convenience to personalised service, relationship continuity and upacking complexity – and we would certainly argue that the broker proposition is a very different proposition than a branch.”
He also added, “We can see that there is no correlation whatsoever to the picture that has been painted in the public domain. And I think this data will achieve a greater degree of awareness based on actual data and relevant facts relating to the amazing outcomes that our industry is producing.”
Mike Felton believes that the brokering industry will keep driving good consumer outcomes and stated that the Combined Industry Forum is working to continually improve the industry.
The MFFA reported that its members will soon be able to download the research data package from its website for brokers to distribute to customers if they so desire.
“We have a massive business collectivity, in the form of the mortgage brokering industry, and we need to do everything that is right to ensure that has longevity.” Said the MFAA CEO. “We will include this message in our ongoing narrative and advocacy going forward because it is very compelling message.”
As this data is analysed and reported, mortgage holders should be able to request the information from their brokers in the coming days.
First Choice Mortgage Brokers are a Sydney Mortgage Broker operating under the Australian Credit Licence Number: 382370
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