The FBAA and MFAA have slammed consumer group CHOICE for its “disturbing lack of understanding” of the broking industry, after it claimed that education and training requirements for new entrants were “light on service and heavy-handed on pressure sales”.
The Finance Brokers Association of Australia (FBAA) and the Mortgage & Finance Association of Australia (MFAA) have dismissed criticism from consumer group CHOICE, which has claimed that borrowers are being let down by a “pushy sales culture and low standards" promoted in the training offered to new entrants to the broking industry.
CHOICE’s editor, finance and services, Andy Kollmorgen, claimed that after completing the Certificate IV in Finance and Mortgage Broking as part of an investigation into the industry’s minimum entry requirements, he found that the course was “light on service and heavy-handed on pressure sales”.
“I took this course thinking it would focus on the finer points of how to find the best possible loan for the client, but the real focus was on sales and lining up clients for the big banks,” he alleged.
He continued: “The course provider gives trainees six months to complete the course, and three tries for each section, including quiz questions that are often laughably simple. I became a mortgage broker in 10 days.
“There is a substantial amount of material to get through, particularly the sections focusing on sales, marketing and office skills. It’s all about drumming up business.”
According to the FBAA’s managing director, Peter White, CHOICE’s claims reveal the group’s “disturbing lack of real understanding about the broking sector”.
“This myth being peddled by CHOICE and a few others at the recent royal commission that a short online course can qualify someone to be a finance broker is completely false,” he said.
Mr White said that the Cert IV requirement was the “right entry point to a continual lifetime of learnings”, which he said included mentoring for a minimum of two years.
“Continuing professional development goes forever at a minimum 25 hours per year for FBAA members, which is higher than the benchmark set by ASIC,” he added.
The FBAA head added that CHOICE was placing “too much emphasis” on the theoretical component of a broker’s training and lacked an understanding of the on-the-job training provided to new entrants.
Mr White said that the Cert IV qualification was analogous to a foundation that’s built upon over the course of a broker’s career.
“Having a proper and well-founded base line of knowledge is all important in learning anything new, and you need to know the basics first. This way, what is built on top is solid and won’t collapse,” he said.
Mr White concluded: “CHOICE provides a valuable service for consumers in reviewing vacuum cleaners and washing machines, and they need to stick to what they know.”
MFAA CEO Mike Felton also expressed his disappointment with CHOICE’s claims, given the high level of scrutiny that the industry has been placed under over the past few years.
“It is disheartening to see these continuing attacks on our industry, given the many years of reviews by ASIC, the Productivity Commission, the Sedgwick Report and the Hayne royal commission, which found no evidence of systemic harm to consumers resulting from mortgage brokers’ activities,” Mr Felton said.
Mr Felton highlighted that MFAA members are required to complete a Diploma of Finance and Mortgage Broking Management in addition to a Cert IV, as well as at least two years of mentoring and 30 hours of Continuing Professional Development each year.
The MFAA CEO noted that brokers are also required to hold an Australian Credit Licence or be a representative of an Australian Credit Licensee, secure a membership with the Australian Financial Complaints Authority (AFCA), hold accreditation with an aggregator and individual lenders, and possess professional indemnity insurance.
Pointing to Momentum Intelligence’s Consumer Access to Mortgage report, Mr Felton stated that consumer satisfaction with the services offered by brokers is a reflection of the quality of training provided by the industry.
“Reviews have found that brokers play a key role in driving competition, choice and access to credit for consumers,” he said.
“More than 96 per cent of broker customers report they are satisfied with their brokers’ performance, which is why consumers are now going to brokers for 60 per cent of all mortgages. They want the industry experience, choice, convenience and service that brokers provide.”
Mr Felton said that the mortgage broking industry continues to reform through the Combined Industry Forum and is progressing in its development of a best interests duty to customers.
“If consumers were unhappy with their brokers, it would show up in our satisfaction surveys, or in complaints data,” Mr Felton said.
The MFAA head noted that in its first six months of operation, AFCA found that mortgage brokers accounted for 0.3 per cent of overall complaints.
“Given this data, it seems to me that perhaps CHOICE’s publicity efforts would be better directed elsewhere in the financial services industry,” Mr Felton said.
Mr Felton concluded: “The MFAA remains committed to ongoing improvement in broker education and will continue to engage with Treasury, ASIC and the entire industry to ensure education standards for brokers remain appropriate.”
CHOICE’s latest comments follow the release of its response to ASIC’s request for consultation regarding the commission’s push to update its responsible lending guidelines (RG 20), in which it submitted that the regulator explicitly prescribe measures within its guidance for mortgage brokers.
ASIC will host public hearings in August to further consult on its proposed changes, with stakeholders invited to participate in the hearings to be drawn from the groups or individuals who provided a written submission to ASIC in the first round of consultation.
The hearings will be held in Sydney and Melbourne.
[Related: ASIC urged to ‘codify’ broker obligations]