Broking industry calls for re-accreditation simplification

While brokers are required to pass accreditation tests to be able to lodge loans with different lenders, concerns have been raised that the long delays in these requests being fulfilled are not only costing brokers time and money but having a wider impact on borrowers.

6–8 weeks to transfer accreditations

According to the Mortgage & Finance Association of Australia (MFAA), brokers hold between 26 and 29 lender accreditations, on average.

The broker association recently established a cross-industry Accreditations Working Group with major lender and aggregator members with the core objective to ensure that “friction” is removed from the various accreditation processes within industry, including the movement of brokers across aggregators.

Speaking to The Adviser, Naveen Ahluwalia – the MFAA’s head of policy & legal – revealed that the working group had found that the accreditation transfer process can take between six and eight weeks.

The group also found that approximately 80 brokers move aggregators every month, meaning that the issue was significant.

“Brokers should have a choice in terms which aggregator they choose to partner with and they should also have a choice if they choose to switch. But the process behind switching needs to be easier than it is currently,” she said.

The issue was flagged by Stellar Finance broker Lisa Bridgett in this week’s episode of the Elite Broker podcast, where she noted that one of the most difficult things she had experienced when moving groups was re-accrediting.

Speaking to The Adviser, Bridgett said: “I didn't realise that I had to be re-accredited with all of the lenders again, despite me actively using them.

“It seems redundant to go through this painful process to issue the same person under the same company with new codes because they move aggregator. Some of these re-accreditations meant doing another course and that is time out of my business, so it’s a frustrating experience to say the least.”

According to the Sydney-based broker, her business had to “go offline” for five days while she waited for her accreditations and agreements to be transported.

“For this change, we had to go offline for five days, which terrified me,” she said.

“That length of downtime can be the difference in delivering for a client and letting them down. We made sure we informed our clients with applications in flight as soon as we knew but it was still an unwelcome hurdle.

“With the right support from the aggregators, you do get there, but it’s just a bit overwhelming and I feel there needs to be a solid review of how to make this process easier for brokers at the aggregation level.”

Peter White OAM, the managing director of the Finance Brokers Association of Australasia (FBAA), commented: “Making things unnecessarily hard is not the outcome industry needs or wants. If a broker is currently active with a lender there is no reason that the portability of codes and accreditations are not just a ‘done’ thing (on the basis there are no underlying issues that need to be addressed).

“In our world of technological advancements, this should be a very simple and easy thing to achieve. It would ensure brokers are not penalised or lose income because of this. It is simply unreasonable otherwise.”

Aggregators spend 180 hours on transfers a month

The MFAA’s Ahluwalia added that the delays in transferring or re-accrediting brokers were not only impacting a broker’s ability to support their clients and generate an income but was also a significant resource impost on lenders and aggregators.

“It takes about 180 hours per month for aggregation groups to process an accreditation transfer, or 2.5 hours per transfer,” she said, outlining that it takes time for relevant checks (including police checks and other relevant compliance checks) to be completed.

What’s the solution?

To overcome the delays, Tanya Sale, chief executive of aggregation group outsource Financial, has suggested that lenders should issue brokers with a standardised broker code that can be ported between lenders.

Sale explained: “A discussion needs to happen, and should be around how the lenders can issue brokers with their own unique broker code, which is aligned to them individually. That way, if the broker transfers, it would be as simple as internally amending the aggregator.

“This could and, most importantly, would avoid going through the whole process of issuing a new broker code, which in many instances requires updated documentation, which causes disruption and delays re: the transfer.”

Sale said a digital solution, such as a blockchain-based identity system, could be used to create a “secure and immutable identity for brokers” where each broker’s information (including their code), would be stored on the blockchain, “ensuring consistency even when switching aggregators”.

She told The Adviser: “Lenders are investing in these kinds of solutions within, already – so to extend it to the mortgage broking industry could see a win-win situation for all parties!

“While we, as an industry, [see] this type of solution as a priority – it is not necessarily a priority for the lenders at this point in time … but you know the old saying ‘if you don’t ask you don’t get!’”

However, given the fact that many brokers may have undertaken their original accreditations several years ago (and many would have done so pre-banking royal commission, when a raft of regulatory changes were brought in and accreditation criteria/privacy statements were different), a straight transfer of accreditations may not always be feasible.

“It is for this reason that we’ve actually been really focused on getting more consistency and more streamlining in terms of the accreditation transfer process,” the MFAA’s head of policy & legal said.

Ahluwalia added that while some of the major lenders may have automated processes for accreditation transfers in their broker portals, there was an opportunity for the industry to create a consistent and simplified transfer form for other lenders to utilise.

“Where there’s not an automated or easy process, there’s an opportunity to streamline,” Ahluwalia said.

“It’s about getting more consistency around the documentation, and more consistency around frame as well,” she said, highlighting that the working group was working on identifying what this form should look like.

Ahluwalia noted that the new broker reference checking protocol – which passed last year – would also help alleviate some of the transfer issues, such as a letter of separation.

“We are going to be working very hard to remove the practice of letters of separations, which is another one of those things that extends the time frames for brokers to get re-accredited,” Ahluwalia said.

“We believe that ASIC will release the revised protocol in the middle of this year, and the objective that we want to get to is for this revised protocol to slowly replace the use of letters of separation in industry.”

What do you think could be done to alleviate and accelerate the transfer of accreditations when changing aggregators? Let us know in the comments below!

[Related: Stronger broker reference checks legislation passed]