Amid growing concerns about the future of broker remuneration, the chief executive of a major bank has explained how the third-party channel fits into the group’s overall mortgage strategy.
Speaking to The Adviser following the release of the group’s half-yearly profit results on Monday, Westpac CEO Brian Hartzer explained the role brokers play for the bank and the expectations of regulators and the community.
“We think brokers are an important part of the mix in terms of originating new customers for us,” Mr Hartzer said. “We have good relationships with many of the broker groups. They bring us lots of new customers. We’ve got no issue with working with brokers,” he said.
“At the same time, we want to do better in our proprietary channels. We know that customers like to come directly to us online. We know that customers like visiting our branches and talking to our people. We think all of the above are important.”
Along with its big four peers, Westpac was quick to respond to the ABA-funded Sedgwick report on 18 April, which included a handful of recommendations on broker remuneration.
Westpac confirmed it will implement all of Mr Sedgwick’s recommendations.
“The issues raised by the regulators do reflect the fact that as the community expects higher standards around assessing customers’ data, around transparency and product features and pricing, it is important that everybody participating in that sector is held to the same standards,” Mr Hartzer said this week.
The Westpac chief warned mortgage brokers almost two years ago that further regulatory scrutiny of the industry was on the cards.
During a panel discussion at Aussie’s 2015 sales conference in Melbourne, Mr Hartzer cautioned brokers not to assume that the current third-party model would remain the same.
“There has been a lot of scrutiny [of] financial advisers in the last couple of years for good reason,” Mr Hartzer said.
“Mortgage broking is probably next,” he said. “Don’t assume that the current model is just going to keep motoring on.
“I think you will find the regulators are going to be increasingly asking questions about sales practices in mortgage broking.
“They are worried about us [the banks] from a responsible lending point of view and are already saying to us, ‘So the broker is your agent in this transaction; how have you assured yourself that what the broker is telling you is correct?’
“That is going to become more of a feature. My advice to brokers is don’t wait for [the regulators] to come after you. Start thinking now about how you’re going to manage that,” he said.
[Related: Major bank's broker-originated loans jump]
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
The federal budget for 2021-22 has been handed down, outlining a ...
SMEs remain one of the most underserviced client segments by big ...
The Mortgage & Finance Association of Australia has applauded...