AFG has cut ties with a new mortgage platform that pays borrowers the same upfront commission as a broker for completing their entire loan process online.
Mark Hewitt, general manager of sales and operations at AFG, told The Adviser the ASX-listed group has discontinued its relationship with Hero BroKer following a review of the platform’s business model.
“There are some aspects of the model not initially proposed to us that we are not comfortable with,” he said.
“Accordingly, we have advised the group that we wish to cease our relationship with them.”
Hero BroKer founder Clint Howen said he was shocked and disappointed by the aggregator’s decision to terminate its agreement with the platform.
“I’ve had a pretty heated exchange with AFG over this,” he told The Adviser.
“The main thing they’re against is the commission going back in any way to the borrower, and said that if I was to give that up from the business model, they would want to continue their relationship with Hero BroKer.
“But it’s not just the commission back to the borrowers that they’re worried about either – they’re also worried that the process could take away the value of a broker.”
Mr Howen denied breaching the contract signed with AFG.
“I’ve never hidden the fact that the platform allows borrowers to broker their own loan – I explain it on the website and in all my promo videos. They just never bothered looking them up,” he said.
“I understand, to a point, the fears that they may have in terms of devaluing their proposition to lenders and raising more questions for ASIC, but I’m all for the consumer, and I just don’t understand how borrowers who use the platform don’t deserve to be remunerated for organising the home loan themselves.
“All I wanted was to create something that is transparent and gives something back to the borrower,” he said.
Mr Howen said that as well as the negative comments he has received from brokers about Hero BroKer, there have also been many industry figures who have offered words of support.
“Now that AFG are no longer on board, we’ll either look for another aggregator or work more closely with the banks,” he said.
[Related: Industry confused by new mortgage platform]
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