The executive director of Smartmove has met with former prime minister and current member for Warringah, Tony Abbott, to discuss the value of the broker market.
David Brell, the executive director of NSW-based brokerage Smartmove, has been meeting with several MPs, including former prime minister Tony Abbott, to showcase the value proposition of the broker channel and warn of the ramifications that could impact the industry (as well as consumers and competition more generally), should the broker model be changed.
Following on from controversial testimony during the financial services royal commission, and while the royal commission is writing its final report of recommendations (which will likely cover broker remuneration and how the broker market is structured), Mr Brell said he has been actively contacting politicians to ensure those in power understand how the broking industry works, and its value to consumers and the wider economy.
Speaking to The Adviser, Mr Brell said: “All my team have sent letters to MPs to let them know their concerns about what is being said about our industry – and we’ve met with Craig Laundy MP for Reid, Chris Gambian, opposition candidate for the seat of Banks, and the former prime minister Tony Abbott.
“I think brokers need to reach out to MPs and candidates on both sides of the political parties – because it isn’t about politics, or philosophies, it’s about making sure our message is heard to those in power. And it needs to be done before 1 February, when the royal commission final report comes out.”
Mr Brell said that while he was initially concerned that contacting politicians for a meeting would be a challenge “because they seem a little bit untouchable”, he added that after making a call to their offices, talking to their staff and sending an email, he had been able to secure a meeting.
“It wasn’t that intimidating at all, in the end. It was just like having a meeting with a customer. It’s actually very easy – I found the politicians to be very friendly, very engaging, and it was good experience. I quite enjoyed it. It was great to think that I was talking to an ex-prime minister about the benefits of what we do.”
What was said
During this meeting, Mr Brell presented Mr Abbott with a briefing paper that included: an overview of the broker market; key industry statistics; the role and benefits of the mortgage broking industry; the benefits of trail commission; and the work that the industry is doing to self-regulate (for example, through the Combined Industry Forum package of reforms).
The Smartmove executive director added: “I also talked about my concerns with Matt Comyn’s comments at the royal commission, regarding fees for service, his suggestion that brokers do little or nothing for trail and the [inaccurate representation of] incomes of the top brokers, which deeply concerned many of us in the industry.
“I highlighted the figures from the Deloitte/MFAA paper which showed that the income of the average broker is modest, and I explained all things that we do to provide ongoing service for the client – and noted that this calendar year (to the end of November 2018), Smartmove has saved its existing clients $395,256 per annum of interest without them changing lenders and that involved 743 pricing requests.”
Mr Brell said that Mr Abbott was “impressed and taken aback” by the savings they had provided to their clients, and seemed “very supportive of the industry, very understanding, and very nice, pleasant, polite and very engaging”.
“He seemed very concerned about the potential impact that changes could have on people and small businesses and was interested in really understanding how the broker market works and the fact that brokers account for more than 55 per cent of the market share.
“He made the point that interest rates are much lower today than they were 20–30 years ago and that is because of the competition factor from the broker channel and smaller lenders,” Mr Brell told The Adviser.
‘A small amount of effort makes a significant difference’
The broker reiterated calls made by WA broker Michael Coombes, urging brokers to “take action now” and meet with their local MPs and senators about the potential ramifications of the royal commission and the important role of the broking industry.
He said: “I would suggest brokers talk about the concerns that the individual might have in regards to particular testimonies from the royal commission. I would also talk about the benefits of what we do, particularly in relation to ongoing services and the money we are saving for our clients, how we are providing competition by supporting non-bank lenders (who would struggle to survive without the broker market) and what we do for our trail commission. Because we do a hell of a lot.
“If the revenue generated to us reduces, there is less that we can do for our customers and that would weaken competition and good outcomes. That would only benefit the lenders that have the largest market share via the direct channel.”
He added that brokers meeting politicians may also benefit from providing “real life stories” about how they have helped clients “because we are guiding people through life changing events, and we provide a form of social responsibility to our customers and play a big part in their lives".
“That is a powerful thing that we do and it is often missed,” he said.
Mr Brell extended an open invitation to all brokers to call him if they wanted to discuss how to meet with their own MPs and ask questions regarding how he went about it, adding: “I would also happily and willing attend any meeting with a broker if they would like the support”.
Mr Brell concluded: “It’s about just doing something. Instead of worrying or being concerned about the outcomes, take action, do something, get on the front foot.
“Spend 15 minutes to send an email, make a phone call and follow up, and you might have a meeting that changes the course of where the industry is going.
“A small amount of effort makes a significant difference,” he said.