ASIC’s remuneration review suggested lenders and aggregators use a new system to identify individual brokers and credit reps
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ASIC’s remuneration review suggested lenders and aggregators use a new system to identify individual brokers and credit reps
Brokers and credit reps could soon be identified by a single number as a result of ASIC’s Review of Mortgage Broker Remuneration.
ASIC wants lenders and aggregators to provide better quality data about the industry: “we expect lenders to use a consistent process to identify each broker and broker business (e.g. use of the Australian credit licensee or credit representative number where relevant, or a unique number provided by the aggregator).”
The MFAA has supported the concept of a ‘unique identifier’ in its submission to the Treasury. The number would be attached to every loan and stored by the lender, commenting “this will allow lenders to identify exactly which broker originated a particular loan so that appropriate data/risk based monitoring can occur.”
Implementing a single number across the industry “could require work and cost”, the MFAA noted. The Australian Bankers Association, however, told MPA that “we don’t have a specific position on a unique single identifier. What we do support is reform to data points that will assist in increasing transparency and accountability.”
What’s wrong with the current system?
Given a broker unique identifier number wouldn’t replace ACLs and credit rep numbers, many in the industry why ask why an extra level of bureaucracy is required.
The answer may lie in ASIC’s experience of collecting data about brokers: in their review, they comment “we encountered notable issues with the availability and quality of key data sought from participants. This affected our ability to perform relevant analysis for some of our core review objectives and also raised concerns with participants’ ability to monitor consumer outcomes for their business.”
According to ASIC, 10% of the data they sought was “simply not available” with a further 40% of data limited by poor quality, limited scope and storage on inflexible legacy systems. Furthermore “most lenders could not provide the credit licence or credit representative number of the broker through whom a loan was sold.”
This made it impossible for ASIC to monitor the outcomes of individual loans, or remuneration paid to individual brokers, or membership of lender broker clubs. The lack of data could even compromise brokers compliance with the NCCP, ASIC suggests: “for example, it may be difficult for a credit licensee to prove that are not conducting business with unlicensed persons when they cannot provide, or do not maintain, accurate licensing information.”
Who wrote the loan anyway?
The problem of identifying brokers is not restricted to ASIC’s reviews, as the concept of the lone broker becomes increasingly outdated.
MPA’s Top 100 Brokers report suggests that at the elite level, brokers now work with a team of assistants. No.1 broker Mark Davis, of the Australian Lending & Investment Centre, wrote 1,097 loans in 12 months; the next highest was colleague Kevin Agent on 707 and then Justin Doobov of Intelligent Finance on 695.
In comparison, the MFAA’s latest Industry Intelligence Service report found the average broker lodged just 21 new applications over a six month period.
Whilst brokers have certain responsibilities under the NCCP, support staff – who are rarely identified - can take care of much of the low-value administrative work associated with writing a loan. Talking to MPA last year, Top 100 brokers Doobov said that “the more staff I have the better I can service a client, which means there’s a high chance they’ll refer me to someone else.”
Brokers and credit reps could soon be identified by a single number as a result of ASIC’s Review of Mortgage Broker Remuneration.
ASIC wants lenders and aggregators to provide better quality data about the industry: “we expect lenders to use a consistent process to identify each broker and broker business (e.g. use of the Australian credit licensee or credit representative number where relevant, or a unique number provided by the aggregator).”
The MFAA has supported the concept of a ‘unique identifier’ in its submission to the Treasury. The number would be attached to every loan and stored by the lender, commenting “this will allow lenders to identify exactly which broker originated a particular loan so that appropriate data/risk based monitoring can occur.”
Implementing a single number across the industry “could require work and cost”, the MFAA noted. The Australian Bankers Association, however, told MPA that “we don’t have a specific position on a unique single identifier. What we do support is reform to data points that will assist in increasing transparency and accountability.”
What’s wrong with the current system?
Given a broker unique identifier number wouldn’t replace ACLs and credit rep numbers, many in the industry why ask why an extra level of bureaucracy is required.
The answer may lie in ASIC’s experience of collecting data about brokers: in their review, they comment “we encountered notable issues with the availability and quality of key data sought from participants. This affected our ability to perform relevant analysis for some of our core review objectives and also raised concerns with participants’ ability to monitor consumer outcomes for their business.”
According to ASIC, 10% of the data they sought was “simply not available” with a further 40% of data limited by poor quality, limited scope and storage on inflexible legacy systems. Furthermore “most lenders could not provide the credit licence or credit representative number of the broker through whom a loan was sold.”
This made it impossible for ASIC to monitor the outcomes of individual loans, or remuneration paid to individual brokers, or membership of lender broker clubs. The lack of data could even compromise brokers compliance with the NCCP, ASIC suggests: “for example, it may be difficult for a credit licensee to prove that are not conducting business with unlicensed persons when they cannot provide, or do not maintain, accurate licensing information.”
Who wrote the loan anyway?
The problem of identifying brokers is not restricted to ASIC’s reviews, as the concept of the lone broker becomes increasingly outdated.
MPA’s Top 100 Brokers report suggests that at the elite level, brokers now work with a team of assistants. No.1 broker Mark Davis, of the Australian Lending & Investment Centre, wrote 1,097 loans in 12 months; the next highest was colleague Kevin Agent on 707 and then Justin Doobov of Intelligent Finance on 695.
In comparison, the MFAA’s latest Industry Intelligence Service report found the average broker lodged just 21 new applications over a six month period.
Whilst brokers have certain responsibilities under the NCCP, support staff – who are rarely identified - can take care of much of the low-value administrative work associated with writing a loan. Talking to MPA last year, Top 100 brokers Doobov said that “the more staff I have the better I can service a client, which means there’s a high chance they’ll refer me to someone else.”
