The contents of a chain of email communications between a mortgage broker and the Commonwealth Bank have been disclosed before the royal commission, revealing the broker accusing the bank of unjustly revoking his accreditation.
In other emails sent to both the bank and his aggregator, the broker criticised membership requirements of broking industry bodies.
Appearing as a witness in the second day of public hearings on Wednesday (14 March) for the Financial Services Royal Commission, director of The Home Loan Broker Mark Harris accused the Commonwealth Bank of revoking his accreditation, without notice, because he had not actively submitted loan applications to the bank for “some time”.
Mr Harris received an email from the major bank on 20 February 2017 which notified him that CBA would no longer accept loan applications from the broker.
In an email sent to his aggregator, Australian Finance Group (AFG), on the same day, the director questioned the bank’s “odd” timing.
The email reads: “[I] just had my accreditation cancelled by CBA. Interesting timing. By the way, it was apparently due to not being active for some time. However, I settled a $900,000 loan in October, so that’s a bit odd.”
Mr Harris told the commission that the bank’s approach would “push brokers” into settling CBA loans for clients that were not the “best fit” for the product to avoid having their accreditation revoked by the bank.
“If I believe over the last couple of years, I haven’t had a client that is the best fit for the Commonwealth Bank. Well, it doesn’t really matter to the Commonwealth Bank; they require a minimum performance standard,” Mr Harris stated.
“The concern is that that will push brokers into using the Commonwealth Bank where they should not have done.”
MFAA and FBAA memberships are “obsolete”
Moreover, it was revealed that Mr Harris sent emails to both AFG and CBA on 8 February 2017, in which he was critical of the major banks’ requirement for mortgage broker membership with the Mortgage and Finance Association of Australia (MFAA) and the Finance Brokers Association of Australia (FBAA).
Mr Harris claimed that the requirement was “obsolete” since it was in place prior to the Australian Securities and Investments Commission’s (ASIC) regulation of the industry.
“[My] belief is because we are regulated now by ASIC, and in fairness, the requirements of ASIC are more stringent than those two organisations, that the majors requiring us to be still members of those organisations is an obsolete requirement,” the director told the commission.
“It is just left over and nothing has been addressed. It’s just another piece of paper, another loophole that a broker has to do, and I just don’t believe it’s necessary.”
The commission also noted that in an email responding to Mr Harris’ criticism of the requirement, AFG appeared to have expressed support for the broker’s view.
However, in CBA’s response on 14 February 2017, it noted that the requirement would remain in place as part of its accreditation arrangements.
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