Media Releases

Mortgage broker peak body responds to Labor statement on broker reforms

The peak body representing mortgage brokers has welcomed Labor’s statement on reforms for brokers saying it will ease some of the mental health duress being felt throughout the nation. Finance Brokers Association of Australia managing director Peter White said the 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...

Bendigo Bank urged to look in the mirror before throwing stones at brokers

The managing director of the Finance Brokers Association of Australia has provided some timely advice for the head of the Bendigo Bank – ‘focus on your own performance instead of attacking brokers’. Peter White said Bendigo Bank is wrong to support the Hayne recommendation scrapping commissions to brokers. “It’s timely that Bendigo Bank attacks brokers on the same day they announce weaker than expected first-half profit results. “While the market was watching Bendigo Bank shares plunge 6.8 per cent in value, their managing director was supporting a fee-for-service model for the broking sector – a ridiculous proposition that would return market dominance to the big banks. “Marnie Baker was quoted saying current arrangements enhance the risk of poor or conflicted advice, but she doesn’t seem to understand that brokers do not give advice, they provide credit assistance as described in legislation.” Ms Baker also suggested a lack of competition was a contributor to the system’s woes. “What do you think will happen if brokers are forced out?” asked Mr White. “There will be less competition and the big four banks – not Bendigo – will benefit.” “Perhaps Bendigo Bank’s shareholders would prefer the leadership team focus on boosting their own results rather than firing shots at brokers who focus on the needs of borrowers, rather than the profit margins of...

FBAA tells MPs and media that brokers are the key to better consumer outcomes

The Finance Brokers Association of Australia (FBAA) has warned both the Federal Government and Opposition that they would be betraying borrowers if the remuneration structure for brokers was changed. FBAA managing director Peter White, who has been prominently featured across national media yesterday and today, told Sky News that if implemented, the recommendations from Commissioner Kenneth Hayne would send Australia back to the dark ages where a few banks held all the power. Mr White also pointed to comments from respected finance commentator Peter Switzer who called the royal commission’s plans for mortgage brokers “crazy”. “The broking sector has undergone reviews from ASIC and the Productivity Commission and each time the recommendation has been not to change the structure,” Mr White explained. The FBAA head has waged a non-stop media campaign from Parliament House in Canberra where he has been since yesterday’s lockup, with a simple message – “Mortgage brokers provide competition and choice, and give borrowers lending options that most people are just not aware of, and these options enable borrowers to get better outcomes.” He also said commentary that criticised broker commissions was misinformed and hypocritical. “Talk about conflicted commissions misses the point, as every business person’s remuneration is conflicted because everyone wants to do business. “The issue is transparency, and brokers already disclose commission under the National Consumer Credit Act, which was established after lobbying from our industry. “Unlike the banks which have done business for years under a shroud of secrecy, the broking industry has pushed for openness and transparency, better business practices, and tough penalties for any broker that does the wrong thing.” He...

Mortgage brokers key to better consumer outcomes

The national peak body representing finance and mortgage brokers has warned both the Federal Government and Opposition that they would be betraying borrowers if they change the remuneration structure for brokers. Finance Brokers Association of Australia (FBAA) managing director Peter White said if implemented, the recommendations from Commissioner Kenneth Hayne would send Australia back to the dark ages where a few banks held all the power. Mr White pointed to comments from respected finance commentator Peter Switzer today who called the royal commission’s plans for mortgage brokers “crazy”. “The broking sector has undergone reviews from ASIC and the Productivity Commission and each time the recommendation has been not to change the structure,” Mr White explained. “Mortgage brokers provide competition and choice, and give borrowers lending options that most people are just not aware of, and these options enable borrowers to get better outcomes.” He also said commentary that criticised broker commissions was misinformed and hypocritical. “Talk about conflicted commissions misses the point, as every business person’s remuneration is conflicted because everyone wants to do business. “The issue is transparency, and brokers already disclose commission under the National Consumer Credit Act, which was established after lobbying from our industry. “Unlike the banks which have done business for years under a shroud of secrecy, the broking industry has pushed for openness and transparency, better business practices, and tough penalties for any broker that does the wrong thing.” He said talk that the current system incentivises brokers to write higher loans is “just rubbish”. “The average broker-written loan is $30,000 higher than the average bank-written loan for a variety of reasons which...

Royal commission recommendations may push up interest rates and reduce housing affordability

The national peak body representing finance and mortgage brokers says the royal commission has failed to understand the role of mortgage brokers and the competitiveness they bring to the market following its recommendations to eliminate trail commissions for brokers, which the Government has implemented from July next year. Managing director of the Finance Brokers Association of Australia (FBAA), Peter White said today should be the day of reckoning for big banks who have spent far too many years putting profits above people, yet the result of eliminating trail commissions could realistically mean interest rate hikes. “This could force up-front commissions to rise in order to compensate for reduced revenues to brokerages, which in turn will lift interest rates and make housing affordability more difficult,” he explained. He also slammed the recommendation to eliminate up-front commissions, and congratulated the Government for not reacting to this. “Commissioner Hayne wants to hand even more power to the big banks and eliminate competition, which is a ridiculous scenario and shows just how out of touch he is when it comes to brokers. “If a user-pays model was implemented, we know that most borrowers wouldn’t pay, and banks would make more money and standards would drop further. “It’s very disappointing that the royal commission wants to destroy some 20,000 small businesses for the monetary gain of the big banks, and we trust the Government will see clearly on this and continue to work extensively with our industry to improve consumer outcomes.” Mr White said borrowers trust and support brokers. “There is a reason why over 59 per cent of loans are written through brokers....

Mortgage broker boss sleeps easy ahead of banking royal commission report

As federal treasurer Josh Frydenberg prepares to release Kenneth Hayne’s report from the banking royal commission today, the man representing the nation’s finance and mortgage brokers has revealed he is sleeping comfortably. Peter White, managing director of the Finance Brokers Association of Australia (FBAA), said despite some isolated criticism of the broking sector and reporting that he labelled “misinformed and sensational”, he is not expecting a massive shake up of the industry. “It is an indisputable fact that there are only a minuscule amount of finance brokers who have done the wrong thing, and they’ve been caught and thrown out of the industry by the regulators, which shows the system is working,” he explained. Mr White, who has spent almost 40 years in the finance and lending industry including roles as CEO of well known lenders, described the royal commission as “the biggest baseball bat to hit the industry that he’s ever seen”, but said finance brokers – who write over 54 per cent of the nation’s mortgages – had already been through a reform process. “This royal commission is about the greed of the big banks and insurance companies, and so it should be because their behaviour has been appalling. “The broking sector was well ahead of the game, as we’ve already been through reviews from ASIC and the Productivity Commission. Before the royal commission was established we changed a number of practices in the interests of openness and transparency.” He said customers were voting with their feet and trusted brokers far more than the banks. “Customers get a better outcome by using a mortgage broker. They get...

FBAA rejects ill-informed CHOICE campaign against brokers

The FBAA has labelled an anti-broker campaign by CHOICE as ill-informed and diametrically opposed to their stated motivation of getting consumers the best deal on mortgages. FBAA managing director Peter White said he was amazed that any reputable organisation would call for consumers to pay up-front fees for broking services when that would simply drive more people to banks. He pointed out the interim findings of the royal commission said banks are driven by ‘greed – the pursuit of short- term profit at the expense of basic standards of honesty.’ “Brokers are transparent about their commissions and they are driven to achieve the best product for the consumer,” he said. “The commissions paid to brokers from lender to lender have a negligible difference so it’s ridiculous to suggest the existing commission structure works against consumers.” Only weeks ago, the ACCC also concluded that banks use their lack of transparency to stifle competition and make extra profit from customers. “Informed commentators understand the role that mortgage brokers play in the financial services industry in this country and they know that consumers get the best deal from a broker who understands their situation and responds accordingly,” Mr White...

New credit card criteria set to impact home loans and retail spending

As the busiest time of the year looms for retail sales FBAA managing director Peter White has warned that changes coming into effect on January 1 will impact credit card holders, and eventually anyone applying for a mortgage or personal loan. “The changes could make it even harder to obtain credit, potentially pushing house prices down further and hitting consumer spending and the broader economy. “I have been in Canberra this month arguing against these changes in their current form. I think there is a general lack of awareness about the serious impact this will have on the deemed capacity of a borrower to repay their debts,” Mr White said. ASIC has introduced new assessment criteria to be used by banks and credit providers when assessing the serviceability of new credit card contracts or credit limit increases for consumers. Whenever a loan provider is assessing a mortgage application, or any application for a loan, they must take into account the ability of the borrower to pay the entire credit limit of every card the applicant has, over a period of three years. If a card holder has three cards each with a $10,000 limit, the serviceability has to include the borrower’s ability to pay back the full $30,000 in a three-year period, as well as being able to service other loans. This applies even if the applicant has a zero balance. Under the changes credit providers will also have to assume an interest rate that is two per cent above the highest rate in the market which is currently 22 per cent. Previously the card holder simply had to...

Borrowers shouldn’t have to make threats to get a better deal

The Finance Brokers Association of Australia (FBAA) has registered a ‘no surprise’ response to an ACCC finding that banks are using their oligopolistic power and pricing structures to squeeze even more profit out of borrowers. The ACCC’s Residential Mortgage Price Inquiry report has found that opaque, discretionary pricing by banks makes it difficult and time consuming for borrowers to shop around and stifles price competition. FBAA managing director Peter White said the report highlighted the fact it is against their interests for banks to make pricing transparent, and that’s where brokers provide the solution. “Brokers are the key to the need for greater transparency and we are able to help borrowers negotiate with their bankers.” Further evidence of the key role of finance brokers also came in the ACCC report which concluded that high search costs and the effort required by borrowers reduces their willingness to shop around. “Every month that passes when a borrower has a bad deal means more profit for the bank and less money for the borrower. Mr White also pointed out that mortgages are not only about interest rates. “Often borrowers get trapped in a loan that doesn’t suit their needs, but brokers have access to hundreds of different loan products and take into account individual circumstances.” The ACCC monitored the prices charged by the five banks affected by the government’s Major Bank Levy between May 9 2017 and June 30 2018. The big four banks gained an estimated $1.1 billion in additional revenue because they took the opportunity to increase headline variable interest rates for interest-only mortgages. “This predatory move by banks cost...
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