The leaders of the MFAA and FBAA have both welcomed the Coalition government’s re-election to power, but said that political engagement should not end now that the federal election is over.
Following the federal election on Saturday (18 May), the leaders of the two main broker associations outlined their thoughts on the election outcome and what they thought brokers should focus on moving forward.
Speaking to The Adviser, the managing director of the Finance Brokers Association of Australia (FBAA) congratulated the Coalition for its election win, adding that he was “very, very pleased with the result”.
While Mr White said that brokers should keep their communication channels open and “stay friendly to everyone in politics”, he believed that the “big elephant in the room has gone”.
“We don’t have to worry about the remuneration side of things,” Mr White said.
“But now we have to work on the best interests duty, clawbacks, responsible lending guidelines (which will have an impact on responsible lending obligations), together with enforceable codes, etc.
“We have to work on all those things. So the work isn’t over, but certainly, I know from my point of view, what I was looking down the barrel of for the rest of this year is now a significantly more pleasant journey than I was expecting.”
The head of the FBAA said that he was particularly keen to see how the best interests duty and clawback policies could be implemented, saying that he was “anti-clawback on a good day” but that he wanted to ensure that the incoming requirements did not penalise brokers for things that were out of their control.
“When an unforeseeable circumstance occurs (like someone passing away or moving overseas, etc.) it’s not that a broker hasn’t done their job. They’ve done their job – it was elements out of their control that saw the loan repaid. And this is where best interests [duty] is going to have an interesting part to play.
“I believe that, if you have done your job, you should get paid for doing your job. And if you are acting in the best interests of your client, you shouldn’t have anything that impedes you from that judgement – but potentially a clawback might.”
Mr White noted that a key question to answer was: “How can you be held accountable in acting in the best interests of a client and financially be stabbing yourself in the back because you need to move someone’s loan in 13 months’ time? It doesn’t make commercial sense. So the conversations that are still happening at the moment with clawback will continue, but it’s really a commercial decision with the aggregator and lender contracts.
“I think it will be a lot more interesting discussions as we get into the working groups around responding to that piece on clawbacks, and I think there needs to be a strong change of the rules,” he said.
Mr White said that he hoped the certainty provided by the election meant that brokers can “ramp back up again” and those that may have held off hiring people or refrained from making business deals started investing money into their business again.
“We need to be pushing towards 70 per cent market share of volume of origination, we need to have confidence in our businesses and start investing and growing broker businesses rather than having the handbrake that we’ve had for the last six months,” he said.
“The royal commission findings and the political fallout saw many brokers retreat into a holding pattern, driven by fear about their very financial survival and what that would mean for borrowers.
“Now that the election is over, I want to urge all brokers to commit to doing everything we can to grow our businesses now that banks know we are a force to be reckoned with.
Likewise, in a note to members, MFAA CEO Mike Felton said there was “no doubt that this election result is a good one for our industry” given that the Coalition had “demonstrated over recent years that it is committed to maintaining competition, choice and access to credit for Australian home buyers”.
However, Mr Felton added that “now is not the time to rest on our laurels”.
He elaborated: “If we’re going to continue to be an industry with outstanding data on customer satisfaction and growing market share, we must continue to reform and evolve.”
The association head said he was looking forward to working collaboratively as the Combined Industry Forum continues its work on this package of reforms, adding that the MFAA would also “immediately re-engage with Treasury to further progress our advocacy for the interests of our industry – and of Australian home buyers – in response to the recommendations of the Hayne royal commission”.
“It is noteworthy that there were a number of recommendations of the royal commission where both the government and the opposition had positions that were aligned and these need to be urgently progressed.
“We know a key element of our role is to help government create an environment in which the customer comes first, without destroying competition in the sector and handing power back to the major lenders. That means ensuring that our industry and its leading association are consulted throughout all steps in the reform process,” he said.
Mr Felton called on brokers to “continue your great work with customers and to provide us with ongoing feedback on how proposed reforms will affect your businesses”.
“It is the hard work of every broker and aggregator in the country and the positive customer outcomes produced that helps our industry remain sustainable and successful for the long term,” Mr Felton said.