Media Releases

ASIC review not about self-regulation

Reports that ASIC’s remuneration review is an opportunity for finance and mortgage brokers to self-regulate have been strongly criticised as being way off the mark by the Finance Brokers Association of Australia (FBAA). Executive director Peter White said the industry is regulated by ASIC, and as such, can never truly self-regulate. “For true self-regulation to exist, one needs to formulate the rules, write them and then police them without external influence,” he said. “In the case of ASIC’s REM review, the industry can have input and offer guidance on possible measures and outcomes, but the decision is made by the minister through Treasury and ASIC then polices those outcomes.” Mr White said industry bodies, such as the FBAA, provide some self-regulation, pointing out that the association has had internal dispute resolution processes available to members for well over ten years. He revealed the FBAA process has just been authorised by the ACCC as a formal disciplinary tribunal that has greater powers and reaches across all finance segments, to “ensure the right outcomes are achieved from any dispute against a member”. However, this tribunal doesn’t replace other dispute resolution processes, the ombudsman, courts, or ASIC’s powers, and “it certainly does not constitute true self-regulation”. “It is also important during this ASIC and Treasury REM consultation process that over eagerness doesn’t cause us to throw the baby out with the bath water.” As part of the association’s response to Report 516 (the REM Review) in relation to Proposal 1 (improving the standard commission model), the FBAA has taken a strong stance in not supporting any changes to commission structures that injure...

Justification needed for interest rate movements

Banks need to justify their decisions to increase interest rates, says the Finance Brokers Association of Australia (FBAA). Executive director Peter White says interest rate movement has seen some investor and interest only loans increase by as much as 66 basis points, some since the federal budget was handed down in May, but there has been little explanation as to why. “And it’s not just the big four that have done this,” said Mr White. “Most banks are doing it, but they haven’t justified their reasons for going this route. “Are they passing on the bank levy to consumers before it comes into play on July 1, trying to slow the market, or destroy small business borrowers by restricting interest only borrowings? “We also don’t know whether the Australian Competition and Consumer Commission (ACCC) has determined that these increases are okay.” Mr White said banks can be compelled to account to the ACCC on rate movements, so the questions are what is the ACCC doing about these movements and what is the government saying to lenders?...

New commercial brand manager

In a move that further enhances value offering to its members and the mortgage broker market, the Finance Brokers Association of Australia (FBAA) has appointed senior manager John Purvis to the new position of commercial brand manager. FBAA executive director Peter White said Mr Purvis, who will lead the marketing and promotional areas of the association, brings a wealth of experience to the role. Mr Purvis comes to the FBAA from a varied background which includes working in a marketing capacity with US sports management company Octagon. He was with the company, which worked with both the NBA and WNBA, for ten years. His other roles include promoting the 2000 Olympic torch relay, marketing with the Brisbane Lions and serving as regional marketing manager for Blackwoods. “My role with the FBAA is not to change things, but to manage and enhance what we have,” Mr Purvis explained. “All the platforms are here, so it’s a matter of putting in processes to support our structures. “While I don’t have a specific finance background, the principles of marketing crosses industries. My job is to make sure we have the right people in key positions who are knowledgeable about the mortgage broker industry. “Fortunately, we have a very good business development manager and other team members who I collaborate...

Reverse mortgage training course for brokers

The Finance Brokers Association of Australia (FBAA) has commissioned a state-of-the-art reverse mortgage educational training course for brokers. FBAA executive director Peter White said the course was much-needed given the gap in the market created by the collapse earlier this year of the previous provider of equity release educational training, Sequal. “AAMC Training Group, our preferred registered training organisation (RTO), was selected to supply this for the industry given their skills and expertise in providing quality high-end educational content,” he said. “The course will be available to the whole industry and not just FBAA members.” The seniors equity release course aims to educate financial services providers seeking to support seniors with an ER loan facility, such as a reverse mortgage. The course consists of three modules: Module 1 – Fundamentals Module 2 – Equity release products explored Module 3 – Client support process & working collaboratively   “When brokers talk to clients about a reverse mortgage they need to understand the full process. They need to know it’s an option for people, particularly seniors,” said AAMC training spokesperson Michelle Firth. “It’s imperative that professionals such as finance brokers understand the fundamentals to successfully engage clients, understand the risks, effectually market equity release products, recognise advice limitations and work proficiently with other professionals in the client advice...

Call for independent actuary to look at banks

The best way to bring clarity to the banking system is for an independent actuary to look at the maths behind the numbers the big four use in the media, according to the Finance Brokers Association of Australia (FBAA). The suggestion follows a call by NAB chairman Ken Henry for a Senate inquiry into the Turnbull government’s $6.2 billion bank levy on the major banks, including Macquarie, contained in the federal budget. “Distinguishing fact from fiction is the major challenge,” said FBAA executive director Peter White. “Are we getting facts from the banks? “Maybe we need an independent actuary to look at the bank’s figures quoted in the media and their impact on shareholders, interest rates and additional fees and charges that may be forced onto borrowers, to get clarification of the real impact the government levy will have, and where.” Mr White said the FBAA is concerned the market chatter about the bank levy, which is mostly a negative impact to everyone except themselves, is muddying the waters. “There are many varying opinions, yet the banks fail to remember the government has backed the majors allowing a cheaper cost of funds by 0.17 per cent over what non-majors get. “We, as people and businesses, all have to pay our taxes and sometimes they go up whether we like it or not. For example, the Medicare levy will rise in order to pay for the NDIS. “So why are the banks, who continually boast about how much money they make, complaining about having to pay their taxes? “We need to ensure they are fully transparent and...

Finance brokers back new financial complaints authority

The new Australian Financial Complaints Authority (AFCA) being planned by the federal government will be good for consumers, according to the peak body representing Australia’s finance brokers, the Finance Brokers Association of Australia (FBAA). The formation of AFCA has been criticised in the media by some smaller financial services firms and the Credit & Insurance Ombudsman (CIO), who claim it will favour the big banks and therefore won’t be trusted. However, FBAA executive director Peter White said the new body will be focused on even better outcomes for small businesses and consumer borrowers, as has always been the case, not associations. “The amalgamation of the Financial Ombudsman Service (FOS), the CIO and the Superannuation Complaints Tribunal (SCT) will improve systems that will lead to better consumer outcomes. “We believe it will speed up turnaround times and streamline case management processes without the non-alignment of processes by two separate ombudsmen. “The CIO needs to remember the ombudsman service is about borrower disputes being resolved and not industry bodies. There is no basis or substance to call for a royal commission into this.” Mr White has also described as baseless, the criticisms by smaller firms that they will end up subsidising a scheme which accommodates the major banks. “There is no evidence at all to support those claims.” He said the FBAA fully supports the government’s initiative to create...

Union broker pay plan misses the mark

A suggestion by the Finance Sector Union (FSU) to restructure brokers’ incomes is flawed, according to the Finance Brokers Association of Australia (FBAA). The union believes there should be a universal income structure for bank employed mortgage salespeople and external mortgage brokers, however, FBAA executive director Peter White said a fee-for-service model in home loan broking won’t work. “A broker is doing a large part of the work for the lender, therefore, it is commercially appropriate for the bank to pay them a commission for doing that work,” said Mr White. He says while the union is very proactive in protecting the income rights of bank employees, it shouldn’t lump financial planners together with finance brokers because the two are vastly different. “A finance broker does not give advice, as per the NCCP, but offers guidance on lending options and then assists a client through the application process to settlement, as per the lenders credit rules. “Financial planners give advice and need to be independent as they can influence an investment market’s performance – returns and outcomes, whereas home loan brokers cannot influence any market outcomes.” Mr White says there are around 25,000 brokers in Australia and the FSU proposal to restructure their incomes in this fashion would have a serious and negative financial impact on them. “It potentially could cause brokers’ businesses to collapse and throw employees out of work.” He says the FSU wants to protect the income and employment rights of banking employees, but brokers also employ people, so their staff employment rights must also be protected in addition to their...

Banks urged not to pass on tax costs to borrowers

A new $6.2 billion levy over four years on the top five banks contained in the federal budget has been cautiously welcomed by the Finance Brokers Association of Australia (FBAA), but it warns the decision could backfire on borrowers if the banks react badly. FBAA executive director Peter White said while the government’s move is aimed at helping smaller banks compete with the big five, there is a risk the big banks could increase interest rates to cover the tax. “I dare say the banks won’t simply absorb this levy, and if they don’t, this will be a bad outcome for home loan and business borrowers. “It’s possible the banks could raise interest rates and that could put housing affordability out of the reach of more borrowers, so we are urging the banks to give an ironclad guarantee that they won’t pass on those costs.” Meantime, Mr White hails as a good move the budget initiative to bring forward a comprehensive package of reforms to strengthen bank accountability and competition. “The banks will need to be more accountable with the government to legislate a new banking executive accountability regime. “It will increase competition in the financial system and improve consumer choices.” Other components of the budget relating to small business also meet the FBAA’s approval, including the extension of the $20,000 immediate tax asset write-off for businesses with up to $10 million turnover. The tax rate for small business is now at 27.5 per cent with the government aiming to lower that to 15 per cent. Mr White said the budget also contained positive news for finance and mortgage...

APRA loan restrictions will hurt small business

The Finance Brokers Association of Australia (FBAA) has criticised the Australian Prudential Regulation Authority (APRA) for clamping down on interest-only loans, saying it will hurt small business. APRA has announced measures to limit the flow of new interest-only mortgages by banks to 30 per cent. FBAA executive director Peter White says APRA is pushing home loan borrowers into principal and interest loans and away from interest-only loans, because the latter are generally there for people with a business, investment, or bridging loan need. “It’s an arbitrary move,” said Mr White. “APRA has lumped everyone in the same basket, which means small businesses could have restricted access to appropriate styled debt. “I mentioned this to the Prime Minister at a business lunch two weeks ago and he was understanding of this consideration.” Mr White says APRA has overstepped the mark without considering the consequences. “If small business people can’t get access to the right style of debt, it may mean they can’t gear their business to expand, take up new contract opportunities, or maintain current staffing levels. “It could push more people onto unemployment benefits because small business won’t be able to hire more staff. “This may mean in the long-term people won’t be able to save as much, and therefore in retirement, will have to rely on the pension.” Mr White suggests neither of these are good outcomes, especially for governments trying to reduce stress on budgets and...
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