“Smart brokers will embrace” calls for greater accountability and best interests duty obligation, the head of the FBAA has said.
Peter White, managing director of the Finance Brokers Association of Australia (FBAA), has commented on the call for greater accountability and transparency in the industry post-royal commission, particularly in light of recent best interests duty regulation, seeing these matters as an “opportunity for growth”.
Mr White said he believes the industry should take advantage of heightened scrutiny, to build greater trust with consumers, and believes that brokers who embrace industry regulation will ultimately benefit.
He encouraged brokers not to get distracted with “white noise” and the negative commentary that surrounds the industry.
“Finance brokers have been through a year where many misinformed commentators were against us, some lenders tried to exploit us for their own gain, and a royal commission didn’t get it right, yet we still command the trust and support of our clients, regulators and government,” Mr White said.
“And the reason is simple – brokers do a bloody good job and care for their clients in a way no bank can, and consumers know this.”
In light of regulatory changes, Mr White said he continues to regularly meet with senior members of the government and these meetings are “encouraging”.
“The government understands the important role of brokers and also knows that the worst scenario for Australia is to give more monopoly power to the big banks.
“I’m confident we will see policies that allow our industry to thrive and grow,” he said.
Mr White concluded by stating current best interests duty obligations should have no effect on brokers already doing the right thing.
“My message to brokers is simple: keep acting in the customer’s best interest, be transparent, provide excellent service, and ignore the inaccurate and self-serving commentary.
“Serving customers is our priority, particularly at a time when trust in the banks is still low.”
Mr White’s comments come after a joint appearance on ABC Radio National with Mark Humphery-Jenner, an associate professor of finance at the University of New South Wales.
Speaking on an episode of Life Matters that discussed the new best interests duty bill, Mr Humphery-Jenner also suggested that the best interests duty will “help” the sector.
The associate professor stated that brokers were already incentivised to work in their clients’ best interests, as commissions paid by lenders are largely the same, and that – as the majority of broker clients come from word-of-mouth referrals and repeat business – they do not want to “alienate existing clients”.
He suggested that the incentive to gain repeat business through good customer service was therefore a stronger incentive for brokers.
Mr Humphery-Jenner continued: “The regulatory framework will add a lot of confidence to the industry and in many respects might actually help the industry by ensuring that consumers know that mortgage brokers will be acting in their best interests and backing up any violations with penalties.
“So, in broad terms, it does actually go a long distance towards satisfying any of the concerns that exist.”
The comments around the new best interests duty and legislative changes come following a consultation on the draft National Consumer Credit Protection Amendment (Mortgage Brokers) Bill 2019, which several industry heads have said requires further clarification.