A non-bank lender has written an open letter to brokers voicing its support of the channel and “the work they do every day to help more borrowers access financial solutions not available at the banks”.
Writing to brokers off the back of the release of the final report from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Bluestone acknowledged that the broking sector has been “abuzz with concerns about its future viability should the final report’s recommendations be legislated”.
The letter noted that the recommendation to transition to a consumer-pays model for mortgage brokers was “widely seen within the industry as a potential death knell to thousands of small businesses operating right across the country”, adding that “a potential decline of our broking industry carries with it a real threat to consumer outcomes, as diversity of choice and competitive pressure among lenders would inevitably reduce alongside it.”
As a non-bank, Bluestone emphasised that it did not “have the benefits of an extensive branch network” and that its ability to offer “more options for borrowers is tied closely to the continued vibrancy and competition the mortgage broking industry offers”.
“In an industry without brokers, many consumers across Australia would simply have little option apart from the local branch of a major bank,” the letter reads.
“As smaller lenders disappear, so would the competitive price tension they bring to the market, ultimately leading consumers to be forced into less choice at higher cost.
“There can be no doubt of the positive impact brokers have had on the industry in terms of increased lender competition and improved consumer outcomes.”
Bluestone went on to highlight that brokers arrange a growing majority of home loans and have fewer complaints and higher levels of trust than their lender-employed counterparts, all the while being “passionate advocates for their clients”.
“[W]ithout this source of professional guidance, many borrowers would be unable to realise their financial goals,” the lender wrote to brokers.
“As such, Bluestone remains entirely supportive of brokers and the work they do every day to help more borrowers access financial solutions not available at the banks.”
In conclusion, the non-bank lender noted that it was “important to remember that the royal commission’s recommendations are not yet set in stone” and that the industry had, over “several decades”, shown “resilience and adaptability throughout some extremely challenging times, not least the global financial crisis”.
The lender noted that the industry had “witnessed inspiring camaraderie and peer support right across the sector” since the release of the report, noting the MFAA-led new advertising campaign, of which Bluestone is a supporter.
“We want our brokers to be absolutely assured that Bluestone will stand behind you during this time, and we continue to support all efforts to help the sector retain its viability and strength,” the letter said.
As well as the Bluestone letter, several other lenders have been throwing their support for the broker channel this week.
Bank of Queensland’s group executive for retail banking, Lyn McGrath, wrote to brokers recently, stating that the bank “believes in the value of a strong, vibrant and sustainable mortgage broking industry”.
“We recognise that mortgage brokers support competition and choice by helping smaller banks compete against their larger rivals.
“In our view, any reform to the mortgage broking industry must be managed in a way that does not undermine the viability of the sector and its positive impacts on competition and customer outcomes. We remain committed to supporting the mortgage broking industry,” she said.
Indeed, Ms McGrath revealed that the bank’s interim CEO, Anthony Rose, had been travelling to Canberra to meet with “a number of key political stakeholders, including the Treasurer and shadow treasurer” since the release of the final report.
“The royal commission’s recommendations, and the risks to the industry of poorly considered reforms, will be one of the key topics of conversation,” she said.
“We want to work constructively with the Government and Opposition to identify a way forward for the industry which supports good customer outcomes, and at the end of the day, this is best achieved by ensuring that Australia continues to have a strong and diverse mortgage broking industry,” Ms McGrath added.
Many others in the lending space have been warning of the potential negative ramifications of overhauling the broker remuneration structure, with many non-bank lenders and even some major banks voicing their support of the broker channel and broker remuneration structure in the past few weeks.
[Related: Citi affirms commitment to broker channel]