Powered by MOMENTUM MEDIA
the adviser logo
Aggregator

Aggregators to ‘audit’ and number brokers under ASIC regime

by James Mitchell5 minute read
audit, broker

ASIC’s remuneration review could see lenders and aggregators increase their scrutiny of mortgage brokers, who would be identified using a “unique number”.

The sixth proposal of ASIC’s review of mortgage broker remuneration states that lenders and aggregators should improve their oversight of brokers and broker businesses.

To continue reading the rest of this article, create a free account
Already have an account? Sign in

ASIC expects aggregators to actively monitor the consumer outcomes being obtained at a broker and broker business level, including those relating to loan pricing, features, clawbacks, refinancing and default rates, and distribution of loans among lenders. Aggregators are expected to retain this information and provide it to ASIC as the regulator looks to continually monitor outcomes across the third-party channel.

“The aggregators will need to gather more information on their brokers, where their loans are going and what type of loans they are writing. Aggregators will need tools to audit and ensure brokers are doing the right thing by the consumer,” Outsource Financial CEO Tanya Sale told The Adviser.

Advertisement
Advertisement

“ASIC will be asking the aggregators what processes they have in place to ensure that the consumer outcomes are being met,” Ms Sale said.

While this creates additional work for aggregators, it could also have a significant impact on the way brokers run their businesses. However, Ms Sale believes brokers should embrace change and consider the opportunities.

“Don’t look at the glass half empty. Realise we are going to make an even bigger impact now. We will have even further information and processes to help us better understand the wants and needs of consumers,” she said.

ASIC has also recommended that lenders increase their oversight of aggregation groups. Lenders are expected to provide consistent reporting to aggregators to allow adequate oversight of brokers.

If implemented by Treasury, these recommendations will mean lenders, aggregators and brokers will need to implement new reporting processes to meet the new regime. This was highlighted in ASIC’s review, where the regulator states that “a consistent process” must be used by lenders to identify each broker or broker business. The regulator suggested using a “unique number” provided by the aggregator to identify each broker.

Ms Sale believes the provision of “good consumer outcomes” must include educating clients.

“How can we provide good consumer outcomes if the consumers don’t understand the lending process?” she said, adding that aggregators have “a big part to play” in providing the tools to their members to be able to educate their clients.

[Related: Aggregation market to 'mature' to disrupt]

Aggregators to ‘audit’ and number brokers under ASIC regime
pileofpaper
TheAdviser logo
pileofpaper

James Mitchell

James Mitchell

AUTHOR

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

JOIN THE DISCUSSION

You need to be a member to post comments. Register for free today

MORE FROM THE ADVISER

Anja Pannek CEO PLAN

Anja Pannek named MFAA CEO

The board of the Mortgage & Finance Association of Australia (MFAA) has confirmed that Anja Pannek will be the...

READ MORE
mike felton mfaa ta jdayl5

Aggregator heads reflect on Mike Felton’s legacy

Following on the news that Mike Felton is to retire next month and step down as chief executive of the Mortgage &...

READ MORE
melanie kiely afg ta mzh8zm

AFG non-executive director steps down from board

Australian Finance Group Ltd (AFG) has advised that Melanie Kiely will be stepping down from the AFG board to...

READ MORE
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more