Brokers thrive in challenging environments and have demonstrated “time and time again” their resilience to changes that have threatened to undermine the industry, according to the CEO of an aggregator.
Speaking to The Adviser, CEO of Choice Aggregation Services Stephen Moore said that, over time, brokers have demonstrated their resilience to internal and external challenges to the industry.
Mr Moore made reference to the industry’s ability to withstand the global financial crisis, changes to licensing requirements and changes to lending policies.
“I think it’s a good time to consider becoming a broker,” the CEO said.
“What we’ve learnt is that when times are changing or there’s uncertainty in the market — like what we’re seeing today — that’s the very time when customers need the right advice and the right guidance and that’s when the role of brokers becomes even more valuable.”
The CEO said that he was confident that brokers would again be able to demonstrate their resilience, despite looming uncertainty over proposed broking industry reforms from the financial services royal commission and the Productivity Commission (PC).
“Time and time again, despite significant changes to the broker market, brokers have not only navigated success through the change, they’ve gone on to bigger and better things,” Mr Moore continued.
“We’ve seen that in market share numbers as well. Broker market share since the GFC and onwards has gone from 30 per cent to 55 per cent today.
“It’s the uncertainty that drives the customer demand.”
Mr Moore added: “If we’re [the broking industry] finding it difficult to keep up with the changes, imagine how our customers feel.”
On CIF’s “customer first duty”
Mr Moore also weighed in on the Combined Industry Forum’s proposed “customer first duty”.
The CEO noted that the CIF’s work to define “good customer outcomes” would provide brokers with greater clarity, but he emphasised that for many brokers “it states the obvious”.
“For most brokers, that’s exactly how they operate today and a customer first duty, putting a customer’s needs ahead of my own, is as much as anything, documenting what is practised today,” Mr Moore said.
“If you asked a typical broker, ‘Do you meet this today?’, their response would be, ‘Absolutely’,” Mr Moore continued.
“Brokers pride themselves in putting customer needs first, and ensuring that a customer has the most appropriate loan to meet their needs, but to date, that hasn’t been documented.”
Mr Moore stated that the CIF’s proposal would clearly define expectations and provide brokers with a “tangible basis to then measure good customer outcomes”.
On PC’s proposed trail ban
Further, Mr Moore highlighted the need to preserve the broking industry’s current remuneration model, amid the PC’s call to ban the payment of trail commission to brokers.
“First and foremost, we fundamentally believe in commission as a remuneration model and that includes both upfront and trail commission,” the CEO said.
“The commission structure is fair and equitable, it’s a sustainable model and, most importantly, it’s the most affordable way for Australians to get credit assistance or credit advice.”
The Choice CEO noted that the CIF is working in cooperation with the Australian Securities and Investments Commission (ASIC) to address “any concerns and perceived conflicts of interest around the remuneration model”.
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