Enough now. The attack on brokers is getting out of hand. Also, the irony of a consumer group called ‘CHOICE’ trying to kill off an industry that provides customers with choice is not lost on me.
To be honest, anything from CHOICE that hits my inbox usually goes straight to trash – where it belongs. But the daily papers have run the so-called consumer advocate’s latest scare campaign and it’s become hard to ignore.
I went on their website and clicked on a link that said ‘Brokers selling mortgages that people can’t afford’ to find out what they’re banging on about. The first two paragraphs read:
“Australians battling medical conditions, unemployment and addiction are being targeted by mortgage brokers who are incentivised by "sizeable commission" payments, consumer groups warn. The claim, made by CHOICE and other consumer groups on the Review of mortgage broker remuneration, presents seven case studies illustrating how brokers navigate the system to sell disadvantaged Australians mortgages they cannot afford.”
There is so much wrong with this that it’s difficult to know where to launch my counterattack.
Firstly, Australians who are battling medical conditions — of which addiction is one — have a right to use a mortgage broker just as much as the next fit and healthy man or woman.
Second, the seven case studies CHOICE uses to illustrate the point they are trying to make (presumably that brokers are the devil) are hardly reflective of an industry of about 15,000 brokers.
I’m guessing that seven case studies were all CHOICE could find. Which accounts for about 0.05 per cent of brokers.
Actually, I’m damn sure that’s all they could find, after reading these comments by Anna Dooland, a financial counsellor who worked on them at Financial Counselling Australia:
"It's not so much the volume of case work, but when they come up they're so bad. They're absolutely so bad that they become enormous cases.”
Next Ms Dooland takes a shot at referral relationships: “Partnerships between mortgage brokers, lawyers and accountants have created an environment where the needs of a customer is no longer the greatest priority”, she says.
"They certainly feed off each other by providing each other business. If they have a business relationship, there's always going to be this implicit pressure to give the loan out."
What she fails to understand about these referral relationships is that the one thing that binds the broker, lawyer and accountant is the customer – squarely the focal point of the partnership.
I don’t need to preach to the choir and remind everyone that brokers provide choice. ASIC has already published its approval of the broker channel and outlined the benefits brokers bring to a more competitive market.
What this consumer advocate, CHOICE, is really doing by attacking brokers is stifling competition and consumer choice. They really need to educate themselves about what 99.95 per cent of brokers do for Australians. Including those with medical conditions.
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.
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