Media Releases

23rd of May 2019

FBAA welcomes APRA rethink

The Finance Brokers Association of Australia (FBAA) has welcomed moves by the Australian Prudential Regulation Authority (APRA) to loosen its deemed serviceability requirements that have resulted in banks rejecting many reasonable loan applications.

FBAA managing director Peter White said times have changed significantly since APRA introduced guidance to authorised deposit-taking institutions (ADIs) to test residential home borrowers against an interest rate of 7.25 per cent, or well above a 2 per cent buffer over the loan’s actual interest rate.

APRA provided its guidance towards the end of 2014 when house prices were increasing and there was strong growth in investor loans.

“The end result was most banks were assessing applications against a rate of 7.25 per cent – way above the interest rate for owner-occupiers and investors.”

On Tuesday the prudential regulator gave the industry four weeks to respond to its proposal to remove the 7.25 per cent requirement, allow ADIs to determine their own floor rate levels while increasing the rate buffer from 2 to 2.5 per cent “to maintain prudence in overall serviceability assessments.”

“Brokers have a duty of care to always assess an individual’s capacity to afford the loan they want as part of our commitment to put customers first. But if the guidance is introduced it simply allows us to help more borrowers into properties that they can afford at a time of low interest rates and subdued house prices.

“When you combine the touted change in APRA guidance with the end of the election cycle and the possibility of the Reserve Bank cutting interest rates in June, there are some positive signs for our housing sector in the months ahead,” Mr White said.

“Just eight weeks ago I supported ASIC and APRA in their criticism of the big banks for blaming tough new interpretations of responsible lending regulations and the royal commission for the credit squeeze and delays in assessing loan applications.

“I will be watching the banks with interest to see who they blame next for their shortfalls after the new APRA guidance is issued.”

20th of May 2019

The FBAA looks to the future after Coalition re-elected

The Finance Brokers Association of Australia (FBAA) has congratulated Scott Morrison and the Coalition for their election win and vowed to work with them to ensure borrowers continue to have choice in a healthy financial services industry.

FBAA managing director Peter White said now is the time for brokers to take the handbrake off and hit the accelerator.

“The royal commission findings and the political fallout saw many brokers retreat into a holding pattern, driven by fear about their very financial survival and what that would mean for borrowers.

“Now that the election is over, I want to urge all brokers to commit to doing everything we can to grow our businesses now that banks know we are a force to be reckoned with.

“We currently provide around 60 per cent of home loans and I think brokers have a great opportunity to increase that to 70 per cent in the short to medium term.”

Mr White said the FBAA had worked closely with both the Government and Opposition in the lead-up to the election and had positive and professional support from both.

“On Sunday I communicated with both Labor and the Coalition, conveying thanks and best wishes from all brokers.

“We will continue to be highly engaged with politicians from across the country because our industry is a crucial one as we move into a new era.

“Brokers welcome the first home loan deposit scheme and other policies aimed at giving the property sector a boost. We will certainly do our part to boost competition and be ready to assist when the policy comes into play in January next year.”

13th of May 2019

FBAA cautiously welcomes first home buyer loan guarantee

The Finance Brokers Association of Australia says the Government’s proposed loan guarantee for home buyers, which will allow them to enter the market with only a five per cent deposit, is a very good initiative.

However managing director Peter White said the scheme’s success will be dependant on the banks which have over tightened credit policies following the royal commission.

“This will be great for first home buyers, although it’s worth noting that only about one tenth of the market will gain access to it,” he said.

While saving borrowers thousands of dollars in lenders mortgage insurance is a good outcome, Mr White cautioned that greater detail is needed to truly assess the benefits.

“There is a very good fundamental reason to have a deposit. If you can save for a deposit you can meet your monthly repayments, and this is what the banks look at.”

He also pointed out that with a falling property market, negative equity is a risk.

“We need to know the lenders’ credit policies around this, and they will have to step up to the mark and support it.”However he said overall, “if it can help stimulate people into buying their own home then that’s great.”

7th of May 2019

FBAA notes interest rate inaction despite solid case for cut

The Finance Brokers Association of Australia (FBAA) says many would-be home buyers will be disappointed by the decision of the Reserve Bank of Australia (RBA) to keep interest rates on hold.

FBAA managing director Peter White said the RBA board referenced employment figures strongly in their statement on monetary policy but also noted the impact of the changing dynamic on the housing market.

“The RBA has admitted that the demand for credit by investors has slowed noticeably as has growth in credit for owner-occupiers.

“Housing does play a major role in the health of the economy and while I understand inflationary pressure is subdued in part because of lower housing costs, we need a healthy and resilient housing market and we need accessible and affordable credit to achieve that.”

Mr White agreed with the RBA that borrowers of high credit quality can benefit from the current low mortgage rates, however that might not help first-home buyers or would be investors with limited credit history.

“As an industry, brokers are a saviour for many borrowers and I think the key role of brokers has been acknowledged by both sides of politics in the current election climate.

“I would have liked to have seen a rate cut but I firmly believe a reduction is still on the agenda in the coming months. What is also needed is certainty for brokers to ensure that we can continue to provide competition to the big four banks.

“We would like a commitment from both sides of politics to ensure the survival of the mortgage broking industry so that all Australians can continue to benefit from the services of a finance broker. We need the right policies to achieve that, not more uncertainty and deferred decisions.”

Australian Broker TV

Letter from Scott Morrison

In a letter addressed to Mortgage Brokers, Prime Minister Scott Morrison says,

“Mortgage brokers are critically important for competition and delivering better consumer outcomes in the mortgage market.”

17th of April 2019

FBAA leader elected as chair of global broker movement

The International Mortgage Brokers Federation (IMBF) has elected Peter White, the managing director of the Finance Brokers Association of Australia (FBAA), as its inaugural chair of their board of governors.

Mr White continues in his role as the association’s managing director and has been part of the FBAA for 16 years holding positions including national vice president, national president, chairman of the board of directors and chief executive officer.

“I am honoured to be elected to this position with the IMBF which uniquely leads the broking industry in global co-operation and collaboration. At no time in our industry’s history has this been done.”

Mr White played a significant part in the birth of the federation which was launched in Canada late last year. A foundation meeting last month established the board of governors and elected office holders.

“The purpose of the IMBF is to lead industry associations around the world in collaboration so they can openly discuss their own journeys with regulation and how they may impact regulation in our own countries.

“The IMBF has already proven its worth in the FBAA response to the banking royal commission. The commission was told by a major bank that the Netherlands broker model should be implemented here.

“Our colleagues in the Netherlands quickly explained the failures of that model and our resulting submission saw both sides of politics, and the commission itself, reject the idea.”

“As well as broking topics the IMBF also discusses matters such as property markets, economies, regulations, global codes of conduct, rules of ethics, data research and best practice so that our members are informed like never before,” Mr White said.

The IMBF also established an international referral network allowing brokers to refer clients moving overseas (or those coming to Australia from overseas) to be looked after by leading professional brokers in the country they are moving to, in consultation with the client’s current local broker.

The board of governors include chief executive officers, managing directors and national presidents representing finance and mortgage broker industry associations from Australia, Canada, the UK and the USA. New Zealand, the Netherlands, and other countries from Europe and Asia are expected to join soon.

16th of April 2019

FBAA welcomes interest rate cuts by big banks and calls on others to follow

The peak body representing Australia’s finance brokers has applauded the Commonwealth Bank of Australia (CBA) and Westpac for giving in to market pressures and reducing fixed interest rates for new borrowers.

Managing director of the Finance Brokers Association of Australia (FBAA) Peter White said the downward moves are not surprising given increasing competition from lenders who were more competitive across the loan products.

“Late last month I called on banks to immediately cut interest rates as evidence increased that the next move by the Reserve Bank would be down. In March there was a sharp decline in short term bank funding rates and the smaller banks were already revising down.”

The moves by CBA and Westpac puts them ahead of the other majors for owner-occupiers and investors and improves their rating against some smaller lenders. Recent figures suggest 40 lenders have dropped rates since the start of 2019.

“The decisions are interesting because they put pressure on the other major banks to at least match them or risk losing more market share. That’s exactly why Westpac moved yesterday after the CBA.”

Mr White said there are many mixed signals in the finance sector at the moment but there is growing speculation that there may be at least one, or possibly two, interest rate reductions by the Reserve Bank this year.

“Consumers will be keeping a close eye on the big banks when the official rates do go down. I expect the banks won’t pass-on the rate cuts in full and that will lead to more confusion for borrowers trying to get the best deal.”

Close to 60 per cent of borrowers currently source their home-loans through brokers rather than going direct to lenders.

“There are very good reasons for that. The royal commission blasted the banks for their culture of greed and lack of transparency. Brokers have a large number of loan providers to choose from and they find the right deal to suit the individual circumstances of each consumer.”

3rd of April 2019

FBAA tips budget boost to result in bank crackdown

The Finance Brokers Association of Australia (FBAA) has welcomed the budget funding commitment enabling ASIC and APRA to respond appropriately to the recommendations of the royal commission.

FBAA managing director Peter White said it’s clear that a significant portion of the $404 million promised for ASIC over four years is for enforcement post the royal commission recommendations.

“Indications are little or none of this additional enforcement funding will be spent on actions against brokers, rather additional action to reign in the banks.”

Mr White cites an ASIC announcement late last year as evidence banks will be the focus. “The FBAA in December revealed that ASIC had reduced the cost to act as a credit representative for brokers from $104 to just $16.48 annually due to the decreased cost of enforcement. It is now indicatively being lowered again by ASIC going forward to $14.33.

“The total cost of legal enforcements against mortgage brokers has reduced to a third of the original cost in a little over 12 months, and now further again and that’s because brokers are doing the right thing by clients.”

However Mr White has strong reservations about the new task force to review brokers remuneration in three years.

“We will work with the new task force but only as it acts as a system of checks and balances and to ensure the model remains commercially sound and in the best interest of borrowers. After years of uncertainty we will not support a review which again puts in doubt the continuity of broker commissions and the ability of a broker to earn a reasonable income.”

He said the FBAA welcomes the move to provide the Australian Financial Complaints Authority with additional funding to assist those with historical eligible financial complaints. The number of financial complaints against brokers is minimal – approximately 0.5 per cent of the total – while complaints against banks have skyrocketed.

Overall, Mr White said he would have liked to see the budget provide more assistance for struggling homebuyers, particularly given the declining home values in some areas combined with persistent global uncertainty.

“The government, and all major political parties, must examine what they can do to stimulate the housing market, not suppress it and that includes any change to negative gearing and capital gains tax,” Mr White said.

1st of April 2019

Big banks urged to cut rates now

The peak body representing Australia’s finance brokers has urged the major banks to stop talking up the credit squeeze and start helping borrowers by cutting interest rates, thereby following the lead of smaller banks.

Managing director of the Finance Brokers Association of Australia Peter White said ASIC chairman James Shipton was right to criticise banks at an industry summit on Wednesday.

“Mr Shipton has called out banks for blaming a credit squeeze on tough new interpretations of responsible lending regulations when the laws have been in place for more than a decade.”

The ASIC chair reportedly told banks to ‘lean in’ to their obligations saying he was unimpressed with industry reluctance to comply with long-standing laws.

“The big four banks cited increased costs when hiking rates months ago and just this week some bank leaders have tried to blame the royal commission for the credit squeeze and delays in assessing loan applications, claims APRA Chair Graeme Samuel called ‘a load of utter nonsense.’

Mr White said banks are still blaming everyone else for their shortfalls, despite ASIC forecasting increased court action against them partly because of alleged breaches of the Corporations Act, which demand services are provided “efficiently, honestly and fairly”.

He also pointed to a sharp decline in short term bank funding rates as the latest evidence supporting rate cuts.

“Smaller banks are already cutting rates and some economists are predicting two official rate cuts this year with the Reserve Bank moving to a neutral bias amid concerns about the slowing global economy and the declining housing market.

“The first official rate cuts of 2019 may be here soon, but going by history, I suspect the banks will protect their massive profit margins by refusing to pass on any cuts in full.”

Further evidence of the dominance of the big four banks came recently when many of the smaller banks, including Bank of Queensland, Bendigo Bank and Adelaide Bank warned of weaker earnings and challenging conditions.

“In the ongoing debate about the reforms impacting mortgage brokers there has never been a more crucial time for competition in the marketplace.”

Stronger together

From the Australian Broker Magazine – 20th November FBAA managing director Peter White on the launch of the International Mortgage Brokers Federation Financial regulators often collaborate across borders to share knowledge and….. read full article...

FBAA announces new state presidents and councillors

The Finance Brokers Association of Australia (FBAA) has announced its new state presidents and councillors for 2019, with a strong and dynamic team set to serve the industry. Felicity Heffernan is the newly elected president for New South Wales and the Australian Capital Territory, bringing 30 years of finance experience to the role. Ms Heffernan said she is eager to give back to an industry that has been good to her for many years, and have a voice that helps shape the broking industry now and into the future. The president for Victoria and Tasmania is Brendon Kurtz, who in 2011 bought into Outsource Financial, the largest privately owned and independent aggregator in Australia. He said his main objective for 2019 is to continue bringing high quality professional development to both metropolitan and regional areas of Victoria and Tasmania. Christine Green has been reappointed president for Queensland and Northern Territory for the fourth year, bringing over 20 years experience in banking and finance. South Australian president Joff O’Shannessy is back for the fifth year. He has been a finance broker for more than 23 years, running his own business for 18 years. Trent Carter has been reappointed Western Australian president, and is aiming to have wider reach across the local industry by having council representatives from residential, commercial, asset, regional, licence holders and ‘new to industry’ members. Mr Carter said he is excited to develop more frequent, smaller events targeted to industry niches, delivering locally relevant content. Peter White, managing director of the FBAA congratulated all elected state presidents and state councillors for 2019, and is looking forward to...

FBAA responds to interim royal commission findings

The Finance Brokers Association of Australia (FBAA) has lodged its response to the interim report of the royal commission into the banking, superannuation and financial services industry. The commission tabled its interim report on September 28, 2018 providing interested parties with a month to make submissions in response. FBAA managing director Peter White said their substantive submission focuses on disclosure obligations, remuneration structures, compliance with existing laws, and the commission’s call for greater regulation. “The association agrees with the commission’s interim report that improvements can be made but we also agree that new laws or regulations aren’t necessarily the answer. “Some of the responses to the royal commission have verged on emotional or value proposition statements, and while most have merit we have deliberately taken a strong legal approach to our language to ensure our messages are clearly understood by the commissioner, a High-Court Judge.” One area addressed in the submission is the issue of full disclosure of remuneration paid to brokers by financiers. The FBAA submission rejected any suggestion of a need for further disclosure measures. “Already brokers have to provide lengthy disclosure documents, while the National Consumer Credit Protection Act 2010 (NCCPA) ensures clients are well-informed about the costs and commissions. “We don’t want brokers to be forced into even more documentary disclosure and that view accords with ASIC’s findings that consumers can disengage because of information overload.” The association takes on the issue of broker remuneration concluding that the current structure is superior to other models and any change may be detrimental. “We are concerned that a change to the existing structure without fully understanding the impact...

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...
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