The FBAA has criticised banks for delaying loan discharges, and has called for standardised documentation around service level agreements.
The Finance Brokers Association of Australia (FBAA) has urged banks to adopt standardised documentation around service level agreements (SLAs) to speed up loan discharges for borrowers wanting to change lenders.
Brokers are reporting that banks are taking 14 to 30 days to finalise discharge documents, even after many requests and approaches, according to FBAA managing director Peter White.
“This appears to be an intentional ploy by the banks that I believe is based on them attempting to cushion their monthly bottom line but also to buy time so that their staff can continue to reach out to clients and try and retain them with incentives,” Mr White said.
Mr White said the more banks cause delay for customers, the less likely it is that those customers will return to them.
“I’d suggest that if a bank is experiencing a major outflow of loans, then maybe they need to consider taking a look at their products and evaluating if they are meeting the needs of the borrowing marketplace,” he said.
According to Mr White, decades ago, it would take around 30 minutes under a manual process to write up loan discharges and around three days for the entire process to be completed and a Certificate of Title to be issued.
He argued that the solution is to create better SLAs, which, Mr White said, “in this day and age should be a no-brainer, as all requirements by lenders are largely the same”.
He added that universal, or standardised, loan discharge agreements, loan application forms and privacy act forms should all be available in the current marketplace.
“When we have platforms like PEXA creating universal e-settlements as well as the likes of Green ID and others, there are no real barriers to make these universal forms a reality,” he concluded.
[Related: FBAA issues warning over fixed-rate ‘trap’]
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.
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