Looming regulatory change signals major opportunity for brokers

“The UK market has certainly become a lot more diversified over the years and it's been interesting to see how they reacted to regulation coming into their market,” Mr Werner said.

“Brokers have really taken that on board and made themselves a lot stronger for it. And I thought, that certainly gives us a lot of learnings to bring back to Australia and ideas about what we can do with our businesses moving forward,” he said.

“Obviously with the regulation from ASIC and talk going on at the moment it’s a good time to really focus on that and see how you can make that work for your business.”

A closer look at recent regulatory changes in the UK show that broker market share has steadily increased as more regulation has been introduced.

One of the biggest changes came in April 2014 with the introduction of the Mortgage Market Review (MMR). The new regulations banned self-certification mortgages, tightened rules around interest-only mortgages, tightened qualifications for sales staff and implanted more stringent affordability checks.

What these regulations have done is create uncertainty among borrowers, not unlike many of the lending changes that have reshaped the Australian mortgage market over the last two years. Brokers have been the natural channel of choice for anxious borrowers in times of regulatory change.

According to Mr Werner, as a consequence of increased regulation, UK brokers have developed a more comprehensive service offering in recent years, naturally offering additional products to meet the full needs of their clients.

“They focus a lot on the risk insurance side. They touch on conveyancing. They really look at every touch point they have with a home loan and they've got themselves involved with that. It has made the experience for the customer better and certainly their relationship a lot stronger,” he said.

“The thing about the brokers over there, they're so much nimbler than the banks and they've made great use of technology. That's certainly helped them.”

UK mortgage giant to harness technology

Mortgage Advice Bureau (MAB), one of the largest brokerages in the UK with over 900 loan writers, has entered the Australian market through a joint venture with Mortgageport.

In a trading update, MAB CEO Peter Brodnicki said the brokerage will always seek to be an early adopter of new and emerging technologies which he believes will fast become a major differentiator between distributors and firms within the mortgage broking industry.

“The strong position that MAB has due to its proprietary MIDAS Pro platform will enable MAB to prioritise technology developments and roll out more robo-advice style initiatives in 2017,” he said.

“As a result we expect MAB's distribution to be able to compete at the highest level with new technology-led entrants, offering our customers the choice of how they want to research, receive advice and transact.”

[Related: Bank tips broker market share to reach 70%]