Media Releases

Warning to borrowers – don’t be influenced by lender incentives

Australia’s peak body representing finance brokers has urged borrowers to avoid choosing a mortgage based on incentives offered by lenders, as it could lead to unsuitable loans. Executive director of the Finance Brokers Association of Australia (FBAA) Peter White, says reports that incentives such as cash discounts and overseas trips are being dangled in front of customers deemed to be low risk or high-net-worth borrowers, are worrying. He said borrowers with job security and good credit are being targeted. “As nothing is free these days, banks that offer incentives to borrowers need to be careful that they are not overlooking what’s in the best interests of their customers,” he said. “A mortgage is a long-term commitment and it is foolish to lock yourself into a contract for such a large amount of money for the sake of a short term financial benefit. “You also need to read the fine print as you may be agreeing to be inundated with emails for insurances, financial planning, or other cross-promotional services by the lender.” He said while offering incentives is not necessarily unethical, it could be considered a grey area. “ASIC and Treasury via the Minister for Revenue and Financial Services are looking at this right now under the NCCP, as incentives potentially put at risk consumers’ best outcomes.” He also questioned the need for lenders to go down this route. “If the lender has the margin for incentives like this, you’d naturally ask why they can’t provide a lower interest rate or other long-term benefits.” Mr White says the practice is yet another reason finance brokers now arrange over half the mortgages...

FBAA says finance brokers can dominate home loan market

The Finance Brokers Association of Australia (FBAA) says the industry can achieve a 70 per cent or higher market share of the home loan business, and 50 per cent of commercial and business lending origination. The association bases its prediction on its Global Research Paper, which was the result of extensive research on how home loans are conducted around the world. “Brokers in Australia have every opportunity to follow markets like the UK and dramatically increase origination market share of home loans written,” said FBAA executive director Peter White. “The high level of professionalism and best practice engaged in Australia under our regulations, and genuine concerns for skilled conduct producing best outcomes for borrowers, is a recipe for more and more borrowers using brokers.” As an advisory board member with the Small Business Association of Australia (SBAA), Mr White sees opportunities for brokers in the small business sector to improve the service they currently provide, and believes broker services are underutilised. “Many brokers are very proficient at business and commercial lending, but they need stronger knowledge skill-sets that deepen their understanding of how those loans function within business markets. “If you are dealing with a borrower who is in an aged care facility, you need to understand the aged care market and its needs. Same with hoteliers, restauranteurs and motel owners, so you can speak their language and gain their respect. “When you actually know their industry and market, you will own the right to their business.” The FBAA will be conducting a Commercial & Business Lending Master Class series this year via the FBAA’s Commercial & Equipment Finance Committee,...

ASIC submission period too long

The Finance Brokers Association of Australia (FBAA) believes the three-month period set aside for submissions on the Australian Securities and Investments Commission (ASIC) report into mortgage broker home loan remuneration is far too long. Interested parties have until June 30, 2017 to give their feedback to the Treasury Department. “This is a poor outcome and the length of time is completely unnecessary,” said FBAA executive director Peter White. “Six to eight weeks would be more than enough time to get it done. “This extracted period only creates longer industry angst as we wait for a conclusion of outcomes and progression of discussions.” The association also believes that the federal government has erred in tasking Treasury with accepting submissions, suggesting that it is the wrong department to deal with them. “This should have been put back into the hands of ASIC to progress industry stakeholder discussions, as they are far more informed about the industry and the current remuneration issues,” continued Mr White. “The government needs to ensure they do not destroy small business confidence by engaging poor processes that create no additional benefit for regulatory outcomes.” He said bringing Treasury into the mix at the last minute creates more unnecessary work for the industry. “ASIC, not Treasury did the review, so Treasury has no base or depth of knowledge of the 27-year plus history of finance broking as ASIC now...

ASIC broker remuneration report positive – FBAA

The Finance Brokers Association of Australia (FBAA) says the ASIC report on finance broker remuneration that was released yesterday is positive for the industry and an endorsement of the FBAA’s position and public comments. FBAA executive director Peter White said he was privileged to have viewed the key findings and proposals under confidence four weeks ago. “In general it is a very good report and supports what I have said for the past twelve months or more in that base-line commissions are perfectly responsible in our market place and they should not change, while incentives that promote volumes risk poor consumer outcomes and must go. “Truth comes through transparency, and therefore ownerships and disclosures proves that we as an industry have nothing to hide. However he said that whether some of the data goes far enough to form conclusive outcomes, is a question that needs to be discussed further. “There are a couple of such matters that we have already raised and will be further discussing with Treasury.” Mr White said the FBAA is continuing in-depth discussions with ASIC on several fronts, and is formulating its response to Treasury in conjunction with input from members and key industry stakeholders. “We look forward to further discussions with Treasury and we continue to be confident in the positive and sound position brokers’ value-proposition holds for borrowers. “For now we need to absorb all that is within this paper and make informed positive responses knowing that fundamentally we have a strong, solid industry that will have every opportunity to attain over 70 per cent origination market share in home lending in...

FBAA’s White to speak to Canadian brokers

The executive director of the Finance Brokers Association of Australia (FBAA) Peter White will travel to Vancouver this month to address the Canadian Mortgage Brokers Association’s national conference. Mr White said it was an honour to be asked and a testimony to the FBAA’s standing amongst finance broker peak bodies globally. He will also be meeting with their national board to discuss issues of mutual interest as well as meeting with the Financial Institutions Commission, the Canadian equivalent of ASIC. “We connected with many of the international associations as we prepared our submission to the current ASIC review, and we were able to learn a lot about how brokers worldwide are remunerated.” Mr White said the Canadian association is keen to learn from the success of the Australian third party channel. “With over 50 per cent of home loans being written by brokers in Australia we set the standard for mortgage...

Finance brokers association calls on banks to be responsible with interest rates after RBA announcement today

 The peak body representing Australia’s finance brokers wants banks to respond appropriately to the Reserve Bank decision today, whichever way it goes. Executive Director of the Finance Brokers Association of Australia Peter White, says he would be “appalled if banks continued raising interest rates if the Reserve Bank keeps official rates at an all-time low as predicted.” “When the banks increase interest rates because their profit margins are being narrowed, the cost regrettably has to be offset by the borrower. In the current climate this would be very difficult to...

“Super as deposit” survey just a media gimmick – Peter White

The Executive Director of the Finance Brokers Association of Australia Peter White says a survey by a loan bidding platform claiming young Australians want to use their superannuation for a home deposit, is simply a media headline and not viable. Mr White said the topic was a discussion point following the release of the Financial System Inquiry final report in late 2014, and while it does work in some countries, the Australian market is different. “I’m not against the concept, but the reality is that with the price of housing in Australia, many people in this demographic would not come close to having enough superannuation for a home deposit. “It also doesn’t take into consideration lending costs, LMI, legal costs, stamp duty and the capability of people to service the loan. He also pointed out that superannuation exists to support people at retirement and any attempt to use it for housing will open the doors for other uses, negating its ultimate purpose. “There are state-based first home buyers grants to assist people in this demographic to purchase their first home.” Mr White said while housing affordability is a real issue and options should be canvassed, this survey should be seen as what it is – an attempt by a sales company with little or no expertise in the superannuation, government housing or lending sectors to generate publicity for its...

FBAA strengthens small business links in industry first

For the first time, Australia’s 24,000 brokers have a voice at the table representing the interests of small business. In an industry breakthrough, the Finance Brokers Association of Australia’s (FBAA) Executive Director Peter White has been invited to join the Advisory Board of the Small Business Association of Australia (SBAA). “Most brokers are small businesses and now they finally have a vehicle in which their interests, concerns and ideas can be heard and acted upon,” Mr White said. The SBAA’s charter is to assist the small business sector to achieve their goals, minimise the rate of failure, and lobby and instruct all levels of government about the role and governance of small business. Mr White said being on the advisory board will help brokers access a greater array of support and communication for their business. “By joining the Advisory Board of the SBAA, the FBAA – through Mr White – is representing brokers from both a credit and lending point of view and also now on all small business issues and perspectives. Mr White attended his first SBAA Advisory Board meeting this month and was left in no doubt about the benefits of having a seat at the table. “Being able to talk about our industry was extremely positive and I know brokers will be excited with the future outcomes that will flow from being able to communicate directly to this key small business peak...

Broker body supports ombudsman amalgamation

The peak body representing Australia’s finance brokers has endorsed some of the key elements of the Ramsay Review’s interim report on external dispute resolution. The report recommends a single industry Ombudsman scheme for credit, financial, investment and small business disputes to replace the existing Credit and Investments Ombudsman (CIO) and the Financial Ombudsman Service (FOS). Executive Director of the Finance Brokers Association of Australia (FBAA) Peter White said while the association welcomes the recommendation to unify the CIO and FOS, it has concerns about the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) also coming under the same scheme. “The ASBFEO should be left as a stand-alone Ombudsman because its responsibilities and dispute resolution matters are entirely different from those being dealt with by the CIO and FOS. “While the FBAA supports the CIO and FOS uniting, a future single Ombudsman must be properly staffed and budgeted appropriately to deal with the increased number of cases,” Mr White said. “It is economically sensible to combine both financial schemes but at the same time, we do not want to see a negative monopolisation to the market which impacts everyone involved. “One Ombudsman is better from a consumer and user perspective provided they have the necessary resources to ensure the issues are dealt with quickly and efficiently, which is not the case at the moment.” Mr White said brokers will benefit in the long-term having a single Ombudsman which is properly resourced and staffed and able to deliver swift outcomes to disputes. “Small businesses will also be better served with their own Ombudsman who can focus on issues relating to their...

Brokers warn car buyers to have finance pre-approved before purchasing

The peak body for Australia’s finance brokers is urging car buyers to do their due diligence and use a reputable lending professional when accessing finance for motor vehicle purchases. Executive Director of the Finance Brokers Association of Australia (FBAA) Peter White said buyers should always have finance pre-approved in principle before entering a car yard to assist them in comparing different terms and conditions. “There has been wide publicity recently about the risks of motor dealership finance, particularly in light of the BMW decision to refund customers who were victims of irresponsible lending decisions. “Car buyers who use dealer finance have to make sure the person providing the finance is professional and is governed by a strict code of conduct and audit measures. It also provides security if they are a member of an industry body like the FBAA.” Mr White said it only takes a phone call or a simple online search to see if they are a member of a professional industry body. “Some motor dealers wrongly believe they are exempt from responsible lending guidelines, and the result is borrowers being given loans with terms and conditions that are not in their best...
Finance App

Download our Free FBAA Smart App for the latest finance business tools for finance professionals.

Look up FBAA events, finance news, send feedback, photos and VoiceNotes.