The FBAA’s managing director Peter White has welcomed Labor’s statement on reforms for mortgage brokers saying it will ease some of the mental health duress being felt by brokers throughout the nation. “This announcement provides some much-needed clarity for brokers moving forward, while also ensuring transparency on commissions. “We will continue dialogue with both sides of politics to further shape the end model so that the borrower wins and competition in the market is maintained. “Labor’s decision to scrap trail commissions and standardise commissions at a fixed percentage of loan size is positive but there needs to be more work done around clawbacks. “There needs to be some protective mechanism in place, and that will be one of the key issues for us moving forward.” Mr White said the government and Labor were aligned in many of their responses to the royal commission but not all. “Both sides of politics should be congratulated for their willingness to listen to the industry but those talks are not over yet,” Mr White...
In the later part of 2016 and in part a response to the current review and report which has been conducted by ASIC into commissions paid to mortgage brokers on home loans, the FBAA conducted research around the world into how home loan brokers are remunerated/ compensated. This report has been given to the Federal Minister Kelly O’Dwyer and several other Senior Ministers and Senators as well as to ASIC. You can read the full report...
The current status of Treasury’s Funding of ASIC back to industry remains in ongoing discussions with Treasury and key profile industry stakeholders regarding the proposed funding model for the Australian Securities and Investments Commission (ASIC). Under its second proposed funding model delivered to industry last month, Treasury wants Australian Credit Licensees (ACL) to pay a yearly base fee of $1000 and for those ACL-holding intermediaries (brokers), an additional levy of $1.14 for every extra $10,000 they write above a $100 million threshold is also proposed. There are many questions need to be asked about this model and most cannot be answered at this stage because of the limited data available. It is important to note this replaces the current annual credit licence renewal fee and is not and additional levy or tax, albeit it will cost more to renew a licence in the future but that cannot be changed. If ASIC’s recovery costs reduce in the future, so will this fee and conversely so is the opposite if their recovery costs go up. From what we know at this stage is that this proposed model will not deliver a fair and equitable outcome. At the last critical meeting in November with Treasury, where the FBAA was the sole association representing brokers, we were advised that the maximum that ASIC can recover is $15.8 million. So there are too many unknowns to support the proposed model and ACL’s would end up paying much more of the $15.8 million needed to fund ASIC’s Cost of Recovery. Another critical factor to consider is that the $1.14 levy could seriously erode the financial viability of smaller ACL holders, who could fragment to ensure they remain under the $100 million threshold and not be...
by MPA | 5th December 2016 (MPA – Original article) The FBAA’s Peter White says only an industry association driven by brokers can truly understand the challenges facing brokers The FBAA places a great emphasis on our statement that we are run by brokers for brokers. It is important that, as an industry association, we are always driven by our members and what is in their best interests, and only finance brokers can truly understand the challenges and priorities of their peers. That’s why the FBAA is outspoken on issues that affect our members, and are willing to challenge the banking sector in an informed manner when needed. While banks are, of course, an important stakeholder and we always seek to build stronger relationships with them, we are not beholden to them and have an obligation to speak openly and candidly when necessary to promote the interests of finance brokers. “While banks are, of course, an important stakeholder and we always seek to build stronger relationships with them, we are not beholden to them” While we often speak publicly through industry channels, such as this publication, most of our work is done behind the scenes, and carries the focus of advancing our industry, ensuring regulatory guidelines are framed to maximise the benefits to both brokers and customers. The FBAA presents a strong voice to government and regulators, providing sound knowledge of the needs of our industry and its value proposition to brokers. The correct guidance and commentary being given to government is vital in shaping our future and guiding our current needs. As the public face of our organisation,...
What does the expansion of the unfair contract terms legislation mean for FBAA members? The Federal Government has decided to extend the existing unfair terms provisions of the Australian Consumer Law to contracts entered on or after 12 November 20161 where: • the other party has agreed to a standard form contract; • the other party is a business with fewer than 20 employees (a small business); and • the upfront price payable under the contract does not exceed $300,000.00, or $1,000,000.00 if the contract runs for more than 12 months. If a term in such a contract is declared by a court or tribunal to be ‘unfair’ it will no longer apply and will be void.2 In such a case, you may be required to pay compensation to the other party, and regulators such as ASIC or the ACCC can also release online media statements about the matter. Will the laws apply to the contracts you have with your clients? The laws will apply to standard form contracts for the supply of goods and services or for financial products. If you act as an intermediary for a lender, or if you provide advice to a customer about loans and credit providers, it is likely that a contract which is in standard form will fall within this category. The contract must be a standard form contract for the new laws to apply to it. A court will consider numerous factors in determining if a contract is a standard form contract. Factors such as whether the contract was offered on a ‘take it or leave it’ basis and whether the...
With one of the big banks increasing variable home loan interest rates, it is the perfect time for brokers to show their worth to new and existing customers according to the head of the Finance Brokers Association of Australia (FBAA). The 0.2 percentage rise for both investor and home occupier loans by Westpac takes effect on November 20. “This is not a surprise as lenders are facing greater scrutiny in regulatory requirements but again it is the customer that unfortunately has to pay the price,” said FBAA Chief Executive Officer Peter White. “I predicted this rise some months ago even though official cash rates were at record lows. It is not surprising that banks were going to increase their capital adequacies and that borrowers would pay the price in the interest areas. So this is expected albeit not welcomed.” “It presents nonetheless an ideal opportunity for the broker channel to show our benefit to customers by helping them navigate through the maze of the many options available to them.” “Refinancing is one option of course but more than that, brokers have the knowledge and the contacts to get their customers into an arrangement that best fits them when circumstances change.” Mr White says a rate rise is usually an emotional experience for clients and customers but it is the brokers who are best able to communicate and give them clarity on just what an interest rate means to them and the household budget. “This is a big part of our ongoing training and personal development programs. Our brokers get schooled into communicating the right messages to their customer, alerting them to the whys...
