More than 65 per cent of brokers are either “seriously” or “moderately” concerned that the royal commission will negatively impact the industry’s reputation, according to a new survey.
The latest MyState Bank survey, which polled its national broker network, found that the majority of brokers were concerned about the public perception of the broking industry off the back of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The first round of hearings for the royal commission focused on cases of misconduct affecting consumer lending practices, ranging from mortgages to car finance, credit cards and add-on insurance products.
For mortgages, the commission delved into specific case studies of NAB introducer program and fraudulent loan applications, Aussie Home Loans “fraudulent brokers and broker arrangements”, and CBA accreditation of brokers and broker arrangements.
While the banks were verbally reprimanded from the commission for their failings in several areas, the Mortgage and Finance Association of Australia released a strongly worded statement this week arguing that there is “a risk that the big banks are using brokers as a shield to divert attention away from allegations of their systemic issues, stifling of competition and massive community trust deficit”.
Indeed, the new MyState Bank survey shows that more than a third (34.2 per cent) of the 250 brokers that responded to the survey were “seriously concerned” that the royal commission would negatively impact the reputation of the broking industry, while a further 31.6 per cent said that they were “moderately concerned” about it damaging the public perception of the industry.
Around 35 per cent were undecided whether broker reputations would be tarnished.
The survey also found that there was a general feeling that the ongoing scrutiny of the sector (for example, through the royal commission, the Productivity Commission’s inquiry into competition in the Australian financial system and the Australian Securities and Investment Commission’s shadow shopping exercise) is unjustified.
Notably, 28 per cent of respondents said that they thought the intense focus was “a political exercise designed to benefit non-broker interests”, while 17 per cent said that the broker focus was “unfortunate” but also “self-inflicted as there were rogue mortgage brokers in the past that damaged the industry’s reputation”.
However, 37 per cent were in support of greater industry scrutiny by ASIC when it came to lending standards.
Looking to the future of broker remuneration, 42 per cent of brokers said that the switch to a fee-for-service model was “unlikely” or “would not happen”, but nearly a quarter (23 per cent) of brokers believed this outcome to be “a strong possibility”.
A third of respondents (33 per cent) were “evenly balanced” as to what the outcome would be.
Speaking of the survey, MyState Limited Group’s executive for broker distribution, Huw Bough, said that the survey results showed that while brokers had some real concerns, they were also passionate about their industry, open about problems and supportive of improving standards.
He said: "What is not well understood outside the broker and banking community and needs to be more widely recognised, is that brokers have been actively working to improve customer outcomes and confidence in mortgage banking for quite some time."
For example, Mr Bough highlighted the work being undertaken by the Combined Industry Forum in introducing new reforms for the broking industry.
“The royal commission has attracted a lot of attention recently, but it must also be acknowledged that, well before the commission began, representatives of Australia’s mortgage broking industry prepared a landmark reform package to improve customer outcomes and confidence in mortgage broking,” the executive said.
"Brokers should be given due credit for this and the role they play in providing true competition in the marketplace and greater choice for customers. This would help enhance the reputation of the mortgage broking industry and reduce concerns at this time."
The reform package, which was the result of engagement between industry bodies, lenders, brokers, aggregators and consumer groups through the Combined Industry Forum, agreed on six principles to ensure improved standards of conduct and culture while preserving competition in mortgage broking.
The aggregator is the first to add Islamic financial products an...
The broker association has voiced “serious concerns” of split...
The newly expanded group is setting its sights on technology, inc...