More aggregators have joined the defence of the broking industry and its current remuneration structure, including rolling out a new TV advertising campaign aimed at politicians.
Finsure, AFG and Loan Market have all joined the fight for brokers, with AFG launching a major television campaign aimed at politicians, Loan Market spearheading a customer advocacy social media campaign, and Finsure group managing director John Kolenda warning against the impacts of radically changing broker commissions.
As the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry wraps up its seventh (and final) round of hearings, comments from one major bank CEO about his support of a fees-for-service arrangement for brokers, and given the royal commission’s intimation that it may look to recommend banning trail, the broking industry has been more and more active in hitting back at some of the misinformation and conclusions drawn about the broking industry.
AFG Keep Competition Alive campaign
AFG and Loan Market have both taken an active approach by launching new campaigns designed to highlight to Australians and policymakers the important role mortgage brokers play in providing competition in the Australian mortgage market.
AFG’s #keepcompetitionalive campaign - which includes a television advert running across Sky News, a letter template for brokers wishing to local MPs, a website and digital assets - focuses on how brokers are providing lending competition, giving choice to borrowers, putting downward pressure on interest rates and how they are supporting the economy.
The campaign is targeted at politicians who are in Canberra for the last sitting weeks of parliament before the royal commission final report is handed down in February.
“We believe that the erosion of public confidence in the major banks and their failure to meet community expectations is inextricably linked to the immense market power that they wield,” AFG CEO David Bailey said.
“We have communicated to the royal commission that the competitive tension delivered by a viable mortgage broking channel is vital to help limit oligopoly behaviour in an industry that is dominated by the four major banks... This campaign reinforces that important message and communicates the potential threat posed by the introduction of any new regulations that result in an uneven playing field being further skewed towards the major banks and away from efficiency and competition.
“It’s not in anyone’s interest but the big banks to allow consolidation around their business models.”
Loan Market Brokers Work For you campaign
Loan Market has also launched a #brokersworkforyou campaign, which executive chairman Sam White announced via a YouTube call to action.
“What has become clear to me is that we need to tell our story a hell of a lot better than we have been doing so far. And to that, we need a social campaign.
“I’m calling for every mortgage broker in Australia to start a social campaign. Every customer that you’ve got, I’d love to get a video, a quote, with the hashtag #brokersworkforyou #royalcommission #dontgivethebanksafreekick.
“We need those stories out there. We need a library, a crescendo of awesome customer outcomes... our customer outcomes that show the community just what we do. And that is how we are going to win. That’s how we are going to show these people with vested interests what a great job you do for your customers.”
Finsure issues warning
Meanwhile, Finsure Group managing director John Kolenda has warned that “everyday Australians”, including first home buyers, mum and dad investors and small business would be among the “biggest losers” should there be a major change in broker remuneration following the royal commission.
“A fee-for-service model for brokers, as suggested at the Hayne royal commission, would be financially detrimental for everyday Australians paying off a loan [because] every time they try to move to a better deal, it would cost them, and banks could take advantage of that situation,” Mr Kolenda said.
He added that the industry has been disappointed by the narrow field of reference at the royal commission in relation to evidence surrounding broker commissions.
“Any moves to change the commission-based system will seriously damage the broking industry and leave consumers without the adequate support and guidance of brokers to obtain the most competitive home loan,” he said.
While he added that the royal commission has been doing a “fantastic job”, he said that some of the commentary around brokers has been “very selective”, with little opportunity for rebuttal, and noted that there has been “limited engagement of the stakeholders delivering these services and the impact to these consumers who just want to secure their home or support their business”.
Mr Kolenda concluded that “any drastic change” to the way that brokers are remunerated would put Australia “back to an age where the major banks dominate the market and see consumers paying significantly more each month due to reduced competition in the mortgage market”.
He continued: “We need to be very careful that any major structural change does not materially impact consumers in a negative way, making home loans more expensive and/or dramatically reducing borrowing power, which will flow right through the entire economy.
“Finding the right product at the right price is very challenging, but having a broker by your side with their expertise and experience will ensure you secure a better deal. This is why consumers need a strong broking sector and not a return to major bank domination.”
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.