An industry association, a prominent aggregator and an award-winning broker have all weighed in on CPA Australia’s move into mortgage broking.
The Adviser reported yesterday that the accounting organisation confirmed its members have the option of moving into the mortgage broking space as it seeks to apply for an Australian Credit Licence (ACL), and will pay them on a fee-for-service basis.
All three industry figures opened up to The Adviser about their reactions to CPA’s move.
Justin Doobov, managing director of Intelligent Finance and The Adviser’s top-ranked Elite Business Writer for 2014, said mortgage broking is a full-time job – not just an additional service that an accountant can provide.
“If an accountant thinks they can offer the same calibre of advice that a broker can, and if the accountant has the spare time in their practice to write home loans themselves, I would question the quality of how good an accountant they actually are,” he said.
Mr Doobov also questioned CPA’s fee-for service model, saying that most clients are hesitant to call their solicitor or accountant, as they do not want to be charged for a conversation.
“This cost prohibitor will inevitably cause clients to not have all their questions answered in relation to the loan and will potentially leave many clients with a half-baked solution,” he said.
Tim Brown, CEO of Vow Financial, described CPA’s announcement as “déjà vu”.
“It’s already happening. We’ve got a couple of large accountancy groups that already have brokers based in their businesses and utilise our services. They’re just making it official,” he said.
“It’s not new territory by any means. I think it’s just in recognition that the mortgage component is playing a larger piece in any person’s overall situation. If [accountants] are not across it or servicing it, then obviously they’re going to find it harder and harder to deal with that client.”
Mr Brown said brokers should see this as an opportunity to diversify and grow their business, and hinted that accountancy will probably be the next offering to be endorsed by Vow.
“Yellow Brick Road [the parent company of Vow] already offers accounting through its network. We’ll look to extend that into Vow over the next 12 months.”
FBAA chief executive Peter White said his biggest concern surrounding CPA’s move into broking is its members being faced with a conflict of interest when it comes to providing accounting and broking services.
“How are accountants going to deal with the fact that they’re doing a client’s tax return to minimise what they pay, and then try and organise their mortgage, only for the client to discover that they can no longer afford it because they’ve worked out the figures in such a fashion,” he said.
“And if you end up with an accountant writing home loans and doing the wrong thing, you’ve created a whole new sector of problems that need to be properly regulated. I’d hate to see another raft of action by ASIC.
“There will need to be tight controls around it, because it could become very problematic.”
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