Another industry heavyweight has condemned comments made by the Customer Owned Banking Association (COBA), labelling them as “naïve” and “offensive”.
Responding to The Adviser's story published yesterday about COBA’s controversial submission to the federal government’s Inquiry into Home Ownership, MFAA chief executive Siobhan Hayden said COBA’s commentary on brokers is a sad reflection on its professionalism.
“[COBA] lacks supporting data on the claims made, ignores the industry trends that reflect current consumer confidence in brokers and appears to have no spokesperson,” Ms Hayden said.
“The facts are that brokers have a 51.9 per cent share of settled loans, with more than a 60 per cent share of market growth.
“This is economics 101, demonstrating that consumers are using and recommending the third-party channel. This is supported in the definitive Ernst & Young report we commissioned independently earlier this year.”
COBA stated in its submission that “brokers are only required to recommend a loan that is ‘not unsuitable’, a far cry from the best home loan for the customer, and possibly not even a particularly good product for the individual”.
Ms Hayden said this statement ignores the fact that brokers must consider the customer’s circumstances, including their need for features such as offset accounts, redraw or additional repayment facilities, while providing access to multiple lenders.
“Naive statements such as ‘the best price is often not part of the broker’s considerations’ only highlights the poor understanding of the broker model from COBA’s spokesperson,” she said.
Ms Hayden labelled COBA’s reference – that aggregators and broking groups owned by the big four banks imply a potential bias within the broker community based on their ownership arrangements – as “offensive”.
“It is not supported by any data that shows, despite an overall market share of around 80 per cent of all new loans by the major brands, [that] the industry only refers to them in 68.9 per cent of cases,” she said.
“This shows again either a lack of industry knowledge or simply unsupported commentary by COBA in this submission.”
COBA’s head of public affairs, Luke Lawler, said it is aware of the coverage and lively debate regarding references to mortgage brokers in its submission.
“We would like to make it clear that COBA is not anti-broker,” Mr Lawler said. “We understand the important role that brokers play and the value that brokers provide to COBA members who use the broker channel.
“However, we think it is reasonable to have a public debate about disclosure and transparency for home buyers, given that the Financial System Inquiry final report found that: ‘Often consumers do not understand their financial adviser’s or mortgage broker’s association with product issuers.’
“FSI recommendation 40 is to ‘require advisers and mortgage brokers to disclose ownership structures’.”
Mr Lawler said COBA’s submission does not call for any changes to the sector other than improved disclosure – specifically that “the Committee consider reforms designed to improve transparency and the level of consumer education about mortgage brokers”.
[Related: COBA calls for govt to focus on reform]
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