Media Releases

Brokers urged to check professional indemnity insurance cover

The Finance Brokers Association of Australia (FBAA) has warned brokers to review their professional indemnity (PI) insurance in response to an increase in award limits to be introduced by the Australian Financial Complaints Authority (AFCA). In May the minister for revenue and financial services authorised Australian Financial Complaints Limited to establish and operate the AFCA. The AFCA board has been working with the Credit and Investments Ombudsman board in the transition to the new body while also collaborating with the Superannuation and Complaints Tribunal and the Financial Services Ombudsman. The new arrangements are in place from November 1, 2018. FBAA executive director Peter White said AFCA has forecast an increase in the award limits from the current maximum of $323,500 for any one claim, to $500K. “This change means that unless brokers review and potentially increase their PI insurance levels they may not be adequately protected should a claim of this type be made after November 1,” Mr White said. However, he said brokers who have policies with FBAA’s preferred PI Insurance provider, Insurance Advisernet Australia, will be protected. “We have received written confirmation that the ‘Finance Brokers PI Plus Policy’ with Insurance Advisernet will be altered to cover EDR awards up to $500K for any one claim or up to $1M in the annual aggregate for all new policies and/or renewals issued as from November 1, 2018.” “It means any existing member’s policies that fall due for renewal after this date will benefit from an automatic increase to the above limits for no additional premium charge.” Mr White encouraged brokers with questions to contact Insurance Advisernet national product manager,...

FBAA disputes mortgage broker payments breach the NCCP

The Finance Brokers Association of Australia (FBAA) has rejected claims in the royal commission interim report that lenders paying value-based upfront and trail commissions could be in breach of section 47(1)(b) of the National Consumer Credit Protection Act (NCCP). FBAA executive director Peter White said the interim report did not find any systemic evidence to suggest that conflict of interest in the payment of commissions to brokers directly disadvantages clients. Mr White also took exception to any suggestion that loans sourced for clients with higher leverage are in themselves a bad thing. “It’s the brokers duty to put the client’s interest first and to meet, if not exceed, their expectations. “In meeting client needs brokers are often asked to source higher leverage loans to appropriately support their needs, taking into account a client’s debt levels and loan to valuation ratios. “It’s a broker’s ability to source a specific loan product to suit their client’s specific needs that gives us a market advantage.” In his interim report commissioner Hayne said licensees must make adequate arrangements to ensure clients are not disadvantaged by any conflict of interest that may arise in relation to credit activities. Mr White said adequate arrangements are already in place and so are penalties. “The commissioner pointed out that a breach of the NCCP is not an offence or open to civil penalty. I would argue that the cancellation or suspension of a broker’s licence by ASIC is a substantial penalty in itself.” Mr White said brokers were at the forefront of efforts to improve service delivery and remuneration structures and have been working collaboratively with...

OnDeck Expands Further into Australian Equipment Finance Market

Funding structure enhances small business growth capabilities OnDeck Capital Australia (OnDeck), a subsidiary of the US-listed OnDeck Capital, today announced it will expand availability of its equipment finance solution, representing another example of how fintech lenders are successfully identifying and filling the small business funding gap. Mr Cameron Poolman, Chief Executive Officer of OnDeck Australia, said brokers often speak to OnDeck about the challenges they encounter obtaining traditional finance solutions for non-primary assets. “These include assets such as catering equipment, gym equipment, racking, IT, food processing and fit-outs, which mainstream financiers will not finance because of the asset type or its age, says Poolman. “Currently, to purchase these types of assets, many small business owners must resort to using their valuable working capital or turn to family and friends. Often the purchase simply doesn’t happen and that limits the development or even the ongoing operations of the business”. Mr Poolman said that what distinguishes OnDeck funding solutions from traditional lenders is its focus on the future potential of the business. “We want small business in Australia to succeed. To do this, we must support and invest in solutions for them. Our focus is on a small business owner’s overall financial health, and not just purely on the short-term resale value of its business assets. As such, our equipment finance solution places no maximum age restrictions against any asset class. It provides small business the finance to purchase necessary equipment, frees up cash and gives owners more opportunity to focus on what’s best for their business.” OnDeck’s research has shown that one of the main reasons small business borrow from...

Research reveals high satisfaction with mortgage brokers

New independent research has revealed most people who have sourced mortgages through brokers are satisfied with almost every aspect of the transaction. The Finance Brokers Association of Australia (FBAA) commissioned the research project through finance industry researchers MyNextAdvice to gauge the level of satisfaction with clients who had settled on mortgages obtained through FBAA members. The research took into account responses from 2049 clients who had settled loans, on a range of key performance indicators including broker-client relationship and ease of doing business. FBAA executive director Peter White said the results indicate brokers are doing the right thing by their clients. “Overall confidence with the brokers relevant to this research was 95 per cent, and the same percentage said brokers were easy to do business with.” In other findings: 94 per cent were happy with their broker’s knowledge and competency. 93 per cent agreed their broker had their clients interest at heart. 93.6 per cent found their broker understood the borrowers needs, objectives and financial situation, and 92.1 per cent were satisfied with the strength of the broker-client relationship. The depth in the sentiment came from the many comments that clients volunteered on their survey forms. A high proportion said they had received excellent or fantastic service. One respondent seemed typical in his remarks. “Highly recommended, excellent service, quick response, excellent savings and results. Highly recommended to friends and family who have said the same thing. A+” Mr White said FBAA members were clearly looking after the individual needs of their clients. “While these results are good they are not perfect.   “There is always room to improve but when we...

FBAA calls for uniform accreditation for reverse mortgage writers

The Finance Brokers Association of Australia (FBAA) has called for the introduction of mandatory training and accreditation for anyone offering reverse mortgages to ensure borrowers receive the right advice and understand the long-term implications and opportunities. FBAA executive director Peter White said the release of findings by the Australian Securities and Investments Commission (ASIC) highlights the need for higher standards in the often-misunderstood lending sector. “ASIC found that while reverse mortgages can help people stay in their homes longer and therefore meet their short-term financial goals, often the long-term risks associated with reverse mortgages aren’t adequately explained.” Mr White said the FBAA had been working closely with ASIC on reverse mortgages for some time and had formed a specialised working group under the chairmanship of Stephen Rasmussen following on from the foundational work of the Senior Australians Equity Release Association of Lenders, which folded in 2017. “We are seeking to develop a co-ordinated industry understanding and strategy towards higher levels of training and accreditation, and to improve consumer access to accurate, timely and appropriate advice on their financing options,” Mr Rasmussen said. “Our working group is focussed on a whole of industry approach to strengthen consumer safeguards, but it’s important to note significant protections have been in place since 2011 including high level disclosure requirements and the ‘no negative equity guarantee’. “While in the main lenders have maintained high standards, this is a highly specialised area ideally served by practitioners who have developed the knowledge and experience in the sector. The tick-box response from some lenders is not appropriate as all applicants for reverse mortgages deserve good, independent advice taking into...

ALI Group launches a national radio campaign which will “hero” Mortgage Brokers

 ALI Group launches a national radio campaign which will “hero” Mortgage Brokers ALI Group have announced they are investing in a national radio campaign which will target 25 to 45-year old first home buyers, owner occupiers and families. The campaign, which launched Wednesday 5 September 2018 will run through to the end of November. The awareness campaign will promote the Mortgage Broker channel and ‘hero the mortgage broker’ in a manner not readily known to home and property buyers. With the core message being how mortgage brokers prepare their clients for the unexpected. A series of ALI Loan Protection “moments” will highlight the positive impact and customer outcome that brokers can generate. ALI CEO, Huy Truong says the campaign is about increasing awareness of loan service risks over a 30-year period and that a broker can help with these risks as part of the loan process. “ALI’s research with Core Data surveying over 1,200 consumers, highlighted that 96% of homebuyers expected their mortgage broker to educate them on risks to loan service and to put in place a solution if the client has no plan B”. “This campaign is all about making homebuyers aware that their mortgage broker can meet this expectation. The fact that ALI has paid out over $80m for serious and terminal illnesses, death and involuntary unemployment reinforce that these risks are real, and the brokers involved were pivotal to their clients having financial protection in place”, says Huy Truong. The radio content and messaging will highlight the importance of thinking about the unthinkable, sharing scenarios based on actual mortgage holders who have been impacted by...

Productivity Commission report released

Today the Productivity Commission released their final report into competition in the Australian Financial System, and yes, we are not happy with it at all. Firstly, it is important to note the Productivity Commission (as the Royal Commission) can only make recommendations to government, the decision is with the Federal Minister whom I have been in contact with her office this morning and of course will continue close dialog on this matter with government and the Opposition. For now and as we read the ‘headlines’ of this report, there are many things that simply show the Productivity Commission has chosen not to accept facts and would rather make comments that simply are not correct. We will ensure these matters are corrected and clearly and firmly positioned with the Federal Minister as well as several other key Senior Ministers in the government and the Opposition in our response paper to this report, which we are working on as we speak. Thank you to all those who have called me and emailed me with your concerns and I am working through responding to all of you over the weekend. But I ask that we all take time to digest all this before we comment on specifics or start making any public statements. This time will shortly come however. I will come back to you shortly with our formal media release on this, plus I will keep you up to date as we go through the steps in responding formally to government on this...

Mortgage Brokers increase competition and choice, driving lower interest rates: Deloitte Access Economics

24 July, 2018: A Deloitte Access Economics report released today has found that mortgage brokers drive more competitive mortgage pricing, provide valuable services and greater choice for consumers. The average mortgage broker has access to 34 different home loan lenders, and of these they use an average of 10 lenders to settle loans based on their customer’s choice, financial circumstances, needs and preferences. Mortgage brokers drive competition in the lending market by providing access to a wide range of lenders – not just the major banks or their affiliates – helping to drive down interest rates for all Australian home buyers and investors. The report, titled The Value of Mortgage Broking, which was commissioned by the Mortgage Broking Industry Group (MBIG), revealed that more than half of all home loans each year are originated by mortgage brokers – and this number continues to grow. In addition, the market share of broker-originated loans for lenders who are not major banks or their affiliates has increased from 21.4 per cent to 27.9 per cent in just four years, highlighting the competition being driven by brokers. Mortgage & Finance Association of Australia CEO, Mike Felton, said that the report provided important insight into the industry and the value it provides to everyday Australian homebuyers – particularly in helping to drive lower interest rates for all consumers, not only those who use a broker. “The mortgage broker channel has made home loan financing cheaper for all Australians. While not only providing homebuyers with access to more residential lending options, mortgage brokers have contributed to a fall in net interest margins of more than...

ABC broker clarification not enough

A clarification earlier this month by the ABC of incorrect information broadcast about mortgage broker qualifications does not fix the damage done to the industry’s reputation, according to the Finance Brokers Association of Australia (FBAA). In March, on the back of misinformed reporting during the banking royal commission, the ABC’s chief economic reporter Emma Alberici stated during an episode of the clearly inappropriately named “Matter of Fact” hosted by Stan Grant, that “anyone can set themselves up as a mortgage broker, even a gym owner”. FBAA executive director Peter White, who at the time called on the ABC to “publicly correct the record and apologise”, says the comments were clearly wrong and that Ms Alberici confused a bank’s “introducer program” with professional mortgage brokers. The ABC on June 1 finally issued a clarification on a section of their website that few would even be aware of, as follows: “Matter of Fact with Stan Grant: On 13 March, a discussion about the day’s events at the Financial Services Royal Commission included incorrect references to mortgage brokers.  The ABC acknowledges that there is a regulatory scheme that applies to mortgage brokers and that ASIC has set minimum education requirements for brokers who provide third-party home loan credit assistance.” However Mr White said this so called correction “on an obscure webpage that no one will read”, is an affront to thousands of small business owners who are finance brokers and provide a highly professional service under a strict regulatory environment. “How such a high profile journalist can get away with such blatant misrepresentation of the facts and not be held to more...

Over 1000 to gather for FBAA 2018 conference

The Finance Brokers Association of Australia’s (FBAA) conference has not only cemented itself as the largest annual finance industry event in the nation, but the gala dinner also makes it the most glamorous! Held at Sea World on the Gold Coast on Friday November 16, it will be followed by the dinner which will incorporate the ‘Awards of Supremacy’ recognising broker achievements, and then – for those still with energy – the Firstmac after party. FBAA executive director Peter White says the conference will benefit all who attend, not only due to the inspiring speakers, but from the opportunity to network with other industry professionals from across Australia. “This year’s theme is ‘evolution’, and without sounding like a cliché, I think we can accurately say that we are at a time of great change, and the industry must evolve if we are to grow stronger,” Mr White explained. The conference will focus on changes to the industry in many areas including technology, consumer behaviour, and – in the shadow of the banking royal commission – regulation. A representative from ASIC will provide an update, and industry heads will take part in a panel to answer questions on where the industry is headed beyond the royal commission. However Mr White said it’s far more than a talkfest, but also “an amazing weekend away”. “Last year we had over 180 families come and enjoy Sea World, and we offer child care facilities during the gala dinner, so it really is something for the entire family. “And don’t think of the gala dinner as being remotely similar to anything you’ve experienced before;...
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