Commonwealth Bank has confirmed that brokers, whether new to the industry or otherwise, who hold a direct ACL may not be able to reaccredit with the bank should they change aggregator.
In December 2017, Commonwealth Bank (CBA) announced that it would be bringing in new benchmarks for mortgage brokers “designed to lift standards and ensure the bank is working with high-quality brokers who are meeting customers’ home lending needs”.
As part of the reforms, new mortgage brokers are required to meet new minimum education standards to be able to write Commonwealth Bank loans and demonstrate a commitment to professional development and on-the-job experience.
For CBA accreditation, all new brokers will soon be required to meet the following standards:
- Hold at least a Diploma of Finance and Mortgage Broking Management
- Have at least two years’ experience writing regulated residential loans
- Be a current member of either the Mortgage & Finance Association of Australia (MFAA) or the Finance Brokers Association of Australia (FBAA)
- Be a direct credit representative or employee of an approved aggregator/head group or Australian Credit License (ACL) holder
Trust is “being destroyed because of single-minded bureaucracy”
However, The Adviser has learned that the changes also affect established brokers, under certain circumstances.
The matter was brought to light by established WA-broker Jerry Gibb, director of Coastline Mortgage Services, after he changed aggregator and tried to reaccredit with the big four bank.
However, upon request, Mr Gibb was told that despite his 18 years of experience, he would not be able to reaccredit with CBA as an ACL holder unless he became a direct credit representative or employee of a CBA-approved head group or ACL holder.
Mr Gibb told The Adviser: “Addressing standards for external brokers, while admirable, tackles those outside CBA rather than those inside the bank. Nevertheless, there have been some brokers who need to be reined in and CBA has charged in with new rules but without considering unintended consequences.
“As a victim of those consequences, I need to warn others to be very wary of CBA’s handling of change.”
He explained: “Without explanation or reasonable cause, CBA ha[s] told me I do not meet the new criteria for a CBA broker, notwithstanding 10 years of a trusting and professional relationship, and the introduction of numerous mutual clients.
“That decision will remove me from their record as the registered broker for about 100 clients, [and] it will deny me the opportunity to direct any new or existing borrowers to CBA for lending and open up opportunities to move the existing portfolio to other lenders if the client wants me to service them, which again may or may not be in the consumers’ best interests.
“Why? Simply because I decided to change aggregator. That meant reaccreditation with all the new aggregator’s lenders. All of them, every one of them, have approved the change of aggregator, except CBA.”
Mr Gibb said that he wanted to warn other brokers thinking of changing aggregator that, should they choose to maintain their ACL (and not become a credit representative of the new head group), they could also face difficulty reaccrediting.
The broker revealed that the bank had informed him that they would accredit a new broker with less than two years’ experience if they had a mentor (which several industry members had called for), and noted the irony seeing as he had actually been a mentor to others.
He added that he was “disappointed that a long relationship built on trust [was] being destroyed because of single-minded bureaucracy”.
Mr Gibb concluded: “My belief is that a lot of brokers, once they understand the implications, will not accept the restrictions placed upon them by the bank.
“If brokers fall over and just accept this CBA decision, then allowing one of the big four to undertake this type of behaviour, the rest of the banks will follow and we, as an industry, will stand for nothing.
“Sometimes groups need to stand up and say something about bad behaviour. I believe our industry has enough oversight by regulation and ASIC eyes without the CBA now taking up this role as well.”
“Exceptions may be made”
When contacted by The Adviser for confirmation that the bank would no longer accept reaccreditations from established brokers changing aggregator and operating under an ACL, a Commonwealth Bank spokesperson said: “We are enhancing our accreditation process to allow us to better identify, service and focus on those brokers who are delivering good customer outcomes and are committed to high professional standards for the industry.
“Those brokers seeking to change aggregators or head groups and maintain CBA accreditation will need to meet our new accreditation criteria, which was announced in December last year.
“This includes the need for brokers to be a Direct Credit Representative or employee of a CBA-approved head group or Australian Credit Licence (ACL).”
It is believed that the changes have been brought in to ensure that there is more transparency and accountability for broker compliance, oversight and risk management.
However, the spokesperson added that “all transfer applications are considered on merit and exceptions may be made where a broker can demonstrate they are consistently delivering exceptional customer outcomes”.
He continued: “We have been in contact with this broker’s head group to discuss potential solutions and ensure our customers continue to receive a high-quality home loan experience.”
Mr Gibb’s new aggregator, AFG, told The Adviser that is it “working through the detail of what defines an approved ACL within CBA’s new accreditation guidelines” and is “also discussing potential solutions for Jerry’s situation”.
*The headline of this article was changed at 11.35am on 15/02/2018 to reflect that "exceptions may be made" in some circumstances.
[Related: CBA broker flows continue to fall]
Annie Kane is the editor of The Adviser magazine, Australia’s leading magazine for mortgage brokers. As well as writing news and features on the Australian mortgage market, financial regulation, fintechs and the wider lending market – Annie is also the host of the Elite Broker podcast and regulator contributor to the Mortgage Business Uncut podcast.
Before joining The Adviser team at Momentum Media in 2016, Annie wrote for a range of business and consumer titles, including The Guardian (Australia), BBC Music Magazine, Elle (Australia), BBC Countryfile, BBC Homes & Antiques, and Resource magazine.
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