Media Releases

FBAA slams Choice

The Finance Brokers Association of Australia (FBAA) has taken aim at consumer group Choice for trying to influence the Banking Royal Commission to bring up issues that have been dealt with in the past. Choice has urged the commission to scrutinise trail commissions and how they affect consumer outcomes. “The FBAA has commented on this and proposed discussions with the commission, and this repeated supposed issue simply isn’t an issue,” said executive director Peter White. “It is widely known and repeatedly commented on in the media, and to regulators and government, that trail commission is paid for multiple reasons that all support good consumer outcomes.” Mr White said it is partly to minimise inappropriate churn of loan portfolios which may not be in the borrowers’ best interests, but also for the broker to service any queries from the borrower. “Brokers already review all the loans within their portfolio annually to ensure their loans have not become unsuitable for the borrower due to any changes in their personal circumstances,” he added. “It’s an ongoing job that lenders would not usually do.” Mr White said Choice needs to remember they were part of a mortgage brokerage ‘One Big Switch’ to encourage borrowers to change lenders so they in turn could earn a commission. One Big Switch launched in Australia in July 2011 with the Choice Big Bank Switch, a campaign to cut the cost of mortgages using the power of group switching. 40,000 Australian consumers took part https://www.onebigswitch.com.au/about-us “Strange how it was and is good for them, but not for the greater broker space. Somewhat hypocritical I feel,” he...

Morrison has it wrong on comprehensive credit reporting, says finance broker body

As the Banking Royal Commission starts, the peak body representing Australia’s finance brokers has warned Treasurer Scott Morrison that draft legislation to force banks to hand over more detailed customer credit information will potentially backfire. The treasurer, who last week introduced legislation mandating ‘comprehensive credit reporting’ (CCR), predicted that customers with a good credit history will be able to obtain lower interest rates, however executive director of the Finance Brokers Association of Australia (FBAA), Peter White, said there “is no chance in hell” this would happen. “What will happen is that banks will maintain their current interest rate margins for customers with a better credit file, and increase the rates for those who have been through past difficulties under the guise of being of lesser quality or higher risk,” he explained. “This normally impacts those who can least afford to pay higher interest rates, so it exacerbates their problems and helps no one.” Mr White said CCR has played out badly in the USA where borrowers are punished for issues that happened 10 to 15 years ago. “This is wrong, and we must be very cautious this doesn’t happen in Australia, as we will restrict access to debt for those who shouldn’t be restricted. “Penalising people with higher interest rates is unfair and will lead to very poor consumer outcomes.” The FBAA has urged Parliament to reject the legislation and says it will make its views known directly to the...

Productivity Commission gets it wrong on brokers

The executive director of Australia’s peak body representing finance brokers has slammed the section of yesterday’s draft report into competition in the Australian financial system – released by the Productivity Commission (PC) – that refers to brokers. Peter White of the Finance Brokers Association of Australia says there has clearly been a lack of research by the PC because what they are calling for either already exists under legislation or are a part of reforms already being worked on by the industry in association with ASIC and Treasury. “The authors of this report should be embarrassed, because it was full of incorrect figures and misinformation, even getting the number of brokers wrong. “Honestly, how can an organisation like the Productivity Commission be so clueless about a major industry they are supposed to be researching?” Mr White said the preparation of the report was done with no consultation with the industry. “One of many examples of the PC’s lack of understanding is the call for disclosure of broker commissions when this is already in legislation and has been for years. “They clearly have no idea about the current legislation and haven’t bothered to talk to ASIC about the current comprehensive reform process being undertaken with industry right now.” The broking head, who has been involved in the industry for 39 years said that if it wasn’t for brokers in Australia, there would not be the pricing competitiveness and product enhancement that exists today. Examples are redraws, offset accounts, lines of credit against a residential house — all brought in by the competition and the development of products in the broking...

Without mortgage brokers, banks would still be ‘dictators’: FBAA

Mortgage brokers smashed the bank “dictatorship” on home loans in the 1990s to give Australians cheaper finance and the industry continues to serve the nation well, the Finance Brokers Association of Australia says. “Take mortgage brokers out of the market place and you set the clock back 30 years, allow the banks to become dictators again and let margins double, if not triple,” FBAA executive director Peter White said. “There was no such things as offset accounts, lines of credit, redraw facilities on home loans. These were all innovations that were borne out of the competitive nature that brokers brought into the market.” Mr White mounted a spirited defence of mortgage broking after the Productivity Commission criticised the industry for failing to promote price competition and therefore improve outcomes for consumers. Cost-of-living data released by the Australian Bureau of Statistics on Wednesday showed the biggest quarterly increase in the cost of interest on a mortgage since the end of 2011, despite official interest rates being on hold for 16 months. Mr White said the PC’s proposal to impose on mortgage brokers a legal duty to act in the best interests of clients, such as exists for financial advisers, was unnecessary. Mortgage brokers would also resist any attempt to ban so-called trailing commissions, Mr White said. The PC is inquiring into competition in financial services and a draft report on Wednesday questioned the role of mortgage brokers. “The growth in mortgage brokers and other advisers does not appear to have increased price competition,” the report said. “The revolution is now part of the establishment. Non-transparent fees and trailing commissions, and clear conflicts of interest created by ownership are inherent. Lender-owned...

FBAA sceptical of big bank discounts

The Finance Brokers Association of Australia (FBAA) is sceptical about moves by the big banks to set aside hundreds of millions of dollars to enable them to offer big discounts in the property borrowing market. As reported by the Australian Financial Review, the big four have allocated $600m between them to offer rates that haven’t been seen in more than 60 years. At the same time, smaller lenders are being squeezed out and FBAA executive director Peter White said the first thing that comes to mind is the caveat emptor – buyer beware. “Nothing comes for free and if it seems too good to be true it probably is,” he said. “If what is being reported is the case, then this in essence enables the banks to buy business to increase their databases and profits. “They will also cross-sell insurance and financial planning, plus a whole swag of other products.” The big banks hope their near-record low interest rates will incentivise borrowers to invest in the property market in light of indicators that it is starting to cool off. This strategy is also about encouraging borrowers to swap lenders, so it’s not just about buying property. Mr White said it is yet another example of those banks distancing themselves from the rest of the market indicators, while increasing their profits along the way. “Once you’re on the hook, the big banks increase the margins on their existing loan books and make a huge profit to benefit their shareholders, their own jobs and pockets. “Cheap introductory interest rates with lenders has been going on forever and this, if it is...

FBAA urges big banks to drop rates

The Finance Brokers Association of Australia (FBAA) has welcomed drops in home loan mortgage rates by some smaller lenders, saying it would benefit borrowers if the big banks followed suit. The lenders have cut their rates in a move aimed at attracting owner-occupier and investment borrowers. “It is good to see the non-banks, second tier and small lenders supporting home borrowers,” said FBAA executive director Peter White. “But at the same time, it is disappointing the big banks like ANZ seem disinterested in trying to work with borrowers by doing the opposite and putting their rates up.” Mr White hopes that at some point, the big five will come to the conclusion that using their size to take advantage of the market is not helping anyone. “We hope in 2018 the big banks remember where their profits come from, and that is borrowers,” he said. “And we encourage the banks not to stab borrowers in the back with out of cycle interest rate movements, or unjustified fee...

Restricting interest-only loans could hurt small business

The prudential regulator’s restrictions on the amount of interest-only loans that can be written by lenders could end up hurting small business, according to the Finance Brokers Association of Australia (FBAA). The warning follows the release of data showing that the volume of IO loans sold by brokers, and lenders, has fallen sharply in the past year. “It is important to remember when we discuss this subject that the vast majority of small businesses will borrow against their family home at some stage in their business life, and they need to be able to access the right style of debt for their business, which could well be IO,” said FBAA executive director Peter White. “These restrictions may result in small business borrowers not being able to access the right style of debt, which could restrict their ability to expand, or even to continue to operate. “This could have a major impact on small business in Australia.” Australian Financial Group, the country’s biggest broker network, has released its latest mortgage index that shows a decline in interest-only loans. Just 19 per cent of home loans written in the second quarter of this financial year were IO loans. The Australian Prudential Regulation Authority’s (APRA) new rules restrict interest-only lending to 30 per cent of new business. “It’s tough enough for small business borrowers now in the lending arena without putting additional restrictions on them,” continued Mr White. “Our country is incredibly reliant on the successes of small business and we need regulations that help them succeed, not restrictions that help them fail. “Small business lending should be dropped from these restrictions...

FBAA new board appointed

The Finance Brokers Association of Australia has announced the reappointment of all current board members and the appointment of a new director. Executive Director Peter White, himself reconfirmed at the recent AGM, revealed that Jan Kirstein was reappointed as chairman, Chris Szigeti retained as Vice Chairman and John Mulcair stayed as Treasurer. Kim Szigeti was appointed the new secretary, with Steve Rasmussen, Rick Nieuwenhoven and Stan Millar all renominated as directors. Mr White also welcomed new director Tony Carter from Western Australia, who “comes with vast experience in the motor vehicle and financing sectors”. “This is a great team who have worked together for a significant time period now and understand the need to work for our members,” he said. “The FBAA is getting ready for another strong year and 2018 will of course continue to bring challenges from a regulatory perspective and mean we need to be at the top of our game as an industry body.” He said the royal commission and the ongoing ASIC enquiry were both opportunities for the industry association to promote the interests of the broking sector. “A strong board with extensive broking experience is essential, and I am very pleased with what our board brings to our association and the industry at...
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