The managing director of a national brokerage says that the industry needs to be “culled” of bad apples and believes that banks will ramp up their scrutiny of third-party originations.
Speaking to The Adviser, Corporate Financial Services founder and MD Richard Gorman reflected on how the mortgage broking industry will evolve following a number of inquiries including the Hayne royal commission.
“What will happen and why it is good for the industry is that the banks will now probably put a two-tier introduction system into place. The business coming from brokers will be perceived on quality rather than quantity,” Mr Gorman said. “The good brokerage houses should be able to provide quality and quantity.”
The mortgage professional, who has been operating in the finance space for over 30 years, also believes that some brokers will need to leave the industry as it moves towards a higher level of professionalism.
“There are a lot of people in the industry who shouldn’t be broking,” Mr Gorman said. “What will happen now is the standard requirements to practice as a broker will be higher. Banks will put in place almost an audition process in terms of who they deal with on ability and the capacity to be able to put forward good-quality business, along with an ability to strategically place their clients in situations that are in the client’s best interests, not the broker’s. The good brokers do that.
“Some brokers need to be culled. This isn’t just a matter of putting a shingle out the front and calling yourself ‘ABC Proprietary Limited’. It’s about understanding the financial needs of any client, understanding the marketplace, what options are available, what rates they should and shouldn’t be paying and what is fair and reasonable.
“There will always be a pocket of brokers doing the wrong thing. Most brokers I know are decent people who want to do the right thing by their clients.”
Mr Gorman’s comments come after Loan Market executive chairman Sam White called for greater clarity around broker obligations as stated in the NCCP and further action to be taken towards greater professionalism within the broking industry.
Mr White proposed the introduction of a “bad brokers registry list” to remove brokers who act outside industry standards or commit fraudulent activity immediately from the industry.
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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