The broking industry needs to deliver on its promises, be proactive in engaging politicians and consumers about the value of brokers, and look to diversify ahead of the broker remuneration review in 2022, the executive chairman of Loan Market has said.
Speaking at the Loan Market Game On conference in Tasmania this week, the executive chairman of Loan Market, Sam White, said that the broking industry as a whole needs to be proactive in ensuring that the messaging around the value of brokers, which was started during the banking royal commission, is maintained over the next few years too.
Echoing calls for the broking industry to not “rest on its laurels”, Mr White acknowledged that the banking royal commission had been a “roller-coaster” over the past year, but that “more than ever, it is important to come together and reflect on what we’ve learnt and to start to plan for what is ahead over the coming years”.
Mr White elaborated that there were three lessons the industry had learned over the course of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry:.
He elaborated: “The first is that we must keep communicating with all of the regulators and the decision-makers, consumer groups and any critics. The work is not finished. We’ve really only started this communication process.
“We need to embrace the scrutiny, and it’s right that two-thirds of mortgages are done by a broker. It is right that the government, consumer groups and regulators want to know that what we’re doing is right. And we shouldn’t be afraid of that scrutiny, so we need to embrace it. We need to communicate more clearly, and it’s my job – and all of our jobs – to be communicating to decision-makers,” he said.
Mr White added that the industry also needed to make good on its “promise” around supplying more competition into the market.
He suggested that, as a key message during the royal commission was that brokers create competition and “give [consumers] access to lenders who may not have access to customers otherwise”, the broking industry was therefore beholden to continue offering a broad suite of lenders to customers.
He said: “I think that was a key message that the politicians understood, and I don’t think the lenders have got enough credit for what they did for brokers during that period, the way that represented the industry and spoke to politicians about how important brokers were.
“The promise that we made is that we would generate competition and that is the promise that we need to live up to going forward.
“We need to make sure that we work with all of the lenders on our panel, not just some of them. And that, when a client has a need or a situation [and] there is a lender with a niche that might fit that customer, it is our obligation to make sure we are aware of those and present them [to the customer].”
Mr White told Loan Market brokers that the heart of their work moving forward should be to “never, ever, ever, ever take the customer for granted”.
He explained: “It is an obvious list, but the support of your customers is critical. The stories they told, the way they were mobilised by you to talk to their local MPs, was a ground-roots message, and customers were clear they love their broker. They don’t want to return to an oligopoly. They don’t want to have to put their hands in their pockets and pay an adviser every time they want to make a change. They don’t want their adviser to stick their hand out and say, ‘I know I can help you, but before I do, I need some money’. They don’t want that. And their message is so clear.
“So, we need to re-double down on this focus; we can never take customer support for granted, because if we do, and if it dissipates, then the outcome would be vastly different.”
Mr White said that it was also crucial that customer complaints are listened to and responded to in a timely manner as well.
He said: “Every time there is a lack of communication or every time something happens that we don’t fully respond to for that customer, we risk losing that support. We run the risk of swaggering rather than serving, taking good will from the well rather than putting it back. So, one of the things I want to focus on this year is delighting our customers, not just on giving them good outcomes. We want to give them awesome outcomes.”
The industry thought leader concluded that the broking industry needed to be committed to delivering good value to clients and reducing conflicts while also providing the aforementioned to answer any challenges that were raised during the royal commission.
“We don’t need to change our DNA. This is already what we stand for, that’s what we provide, that’s what we deliver. But we need to be able to prove it and sit down with our harshest critics and debate it and prove it to them too. That’s what I’m going to do, and that is what we all need to do ahead of the review in a couple of years.
“Let’s embrace any questions raised. Let’s lean in and see what else we can do to keep improving customer outcomes, our relationships with all the stakeholders in this industry,” he said.
The Loan Market executive chairman added that the broking industry will also need to be focused on ethics, professionalism, technological advancements and diversification moving forward, in line with customer demand and expectations.
“[W]e need to offer our clients more than just mortgages. I think that’s truer now than it has ever been. Whether you write it yourself, whether you refer it out or bring it out to specialists in your business, whether you do a joint venture or employ someone, there are so many options... This customer experience is going to be broader than just a mortgage. You’ll need to keep in contact with customers, and it is going to be expensive to keep this ongoing relationship with customers going. You need more revenue stream...
“So, this year, diversification is a continuation of this trend, and it will keep going,” he said.
Mr White added that referrers will, like consumers, look for quality brokers rather than quantity of deals, with quality being the “new currency” that forms the basis of referrals partnerships.
He concluded: “[Lastly], regulation is not going to recede. This wave that has come is not going to stop. So, we need to lean in on these changes and be prepared. And we need to do it now.”
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.
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