The risk that brokers could have faced

As open banking continues its rollout in Australia, the future looks more streamlined for consumers. But, according to Connective executive director Mark Haron, brokers could have been hugely disadvantaged had Treasury not amended its Consumer Data Right (CDR) legislation to allow consumers to share their data with brokers.

“It would have created an unlevel playing field in that the banks, the branches and the bankers would have had access to a lot of the consumer banking information and brokers would have been excluded potentially from that,” he told MPA. “How would that have manifested? It could have meant banks directly could have been making faster decisions than through a broker.

“Brokers having the same level of access as banks ultimately means a more level playing field in terms of turnaround times.”

Earlier this month, Treasury released draft rules to amend the CDR for consultation. These amendments would allow customers to share their banking data with mortgage brokers and other “trusted professional advisers” such as accountants and financial advisers. With just 10 days left remaining in the consultation period, both Haron and FBAA managing director Peter White AM told MPA they support the amended rules.

Read more: Open banking to help workflow of brokers

“We (the FBAA) actually spoke to the federal minister back in the early days of CDR being touted to ensure that it expanded and had an inclusiveness of mortgage brokers in it,” White said. “Initially there was great concern from the industry that it would be the domain of banks and that would then create a distortion in the marketplace and potentially an anti-competitive position in the marketplace as to how this would play out.

“Making sure that brokers are part of the drafting is extremely important to us and we’re glad to see that it positions right at the end of the day.”

White said he believed there was no longer cause for concern when it came to the initial fears the broker channel would be disadvantaged by CDR. He said brokers actually stood to benefit from open banking, describing the CDR amendment as a piece of a puzzle that could enable broker market share of originated loans to reach more than 70% in future “so long as it plays out in the right way.”

He said there was nothing in the draft rules that was a major cause of concern for the FBAA, adding that he was happy with its inclusiveness of brokers, and it would be subject to how things “played out in the wash.”

“These things are all very positive steps forward in brokers increasing their market share and they should be viewed with that sort of viewpoint,” he said. “It’s easy to be negative about things, but this is one of many steps that will assist our industry in obtaining even greater market share of originated loans.”

Haron said it was too early to know exactly how it would change the way lenders operate but said it was a good thing for brokers.

“It’s a very positive step enabling brokers to participate in the scheme,” he said. “I think it shows the confidence that Treasury and Government have in mortgage brokers.

“We’ve been talking to a few banks about what their thoughts are on changing the home loan process. For a lot of them it’s a little bit too early to be implementing system changes.”

Read next: The value of open banking

He said while providing access to data could make it easier for banks to verify expenses, there were several grey areas that needed working out.

“For example, it’s very easy to validate expenses when you have access to someone’s bank account details and statements, but to verify income, that can be tricky,” he said. “The net amount that might appear on the statement doesn’t break down how that payment could have been. It could include bonuses, or overtime, or not.

“There’s various things like that. While we have a lot of access to better information it’s going to be interesting to see how banks can pick it up and use it and make the whole process more streamlined for customers and brokers.”

Kate McIntyre is an online writer for Mortgage Professional Australia. She has a wealth of experience as a storyteller and journalist for a range of leading media outlets, particularly in real estate, property investing and finance. She loves uncovering the heart behind every story and aims to inspire others through the artful simplicity of well-written words.
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