Suncorp Group has highlighted the importance of the broker channel amid the Productivity Commission’s ongoing probe into the industry.
Suncorp’s CEO of banking and wealth, David Carter, told the Productivity Commission (PC) on Monday, 5 March, that brokers “play an important and valuable role in providing customers with additional choice and service”.
Mr Carter stated that the broker channel has helped foster competitiveness in the lending space by providing smaller lenders with an opportunity to service borrowers without the need for a physical presence.
“We [Suncorp] have a predominance of our physical presence in Queensland, which is about 18 per cent of the mortgage market,” Mr Carter said.
“Two-thirds of the mortgage market is in NSW and Victoria, so if one wants to participate in that market — to grow or diversify risk — the mortgage broking channel offers us a relatively lower cost of entry into the market.”
The Suncorp executive also played down the PC’s concerns over conflicts of interest that may arise from vertical integration in the industry.
In its draft report, the PC alleged that brokers working for lender-owned aggregators could feel obliged to write loans funded by the parent company.
In draft recommendation 8.1, the PC called for the introduction of a legal duty of care imposed by the Australian Securities & Investments Commission (ASIC) to ensure that lender-owned aggregators “act in the consumer’s best interest”.
However, Mr Carter believes that such risks have been managed well by the broking industry.
“We are very dependent on that market, we work closely with the aggregators and the people we work with are generally pretty good at managing that conflict, from what we’ve seen,” the CEO added.
The Suncorp representative went on to say that he supports greater transparency and disclosure in the industry, but he emphasised that most brokers work in the best interests of their clients.
“[Brokers try] to give their client the best possible experience and outcome as [professionals].
“They don’t want the client’s time wasted. They want to make sure they’re not going to be surprised, they’re not going to be treated poorly, and then that the product is going to work for what the client is trying to achieve,” the CEO continued.
Mr Carter said that the vast majority of brokers are honest, ethical people [who] really care about their clients. There’s always a risk of a small element of people who need to move out of that industry and be dealt with, as in any [industry].
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