FBAA executive director supports end to Platinum and Diamond Broker-type clubs called out by ASIC’s review
FBAA executive director supports end to Platinum and Diamond Broker-type clubs called out by ASIC’s review
Elite broker clubs “need to go”, FBAA executive director Peter White has told MPA in an exclusive interview.White was responding to ASIC’s recently released Review into Mortgage Broker Remuneration, which criticised such schemes as soft dollar incentives that are potentially detrimental to consumers. “It is disgraceful to have these things,” White told MPA: “at the back end is a borrower who’s got nothing to do with these schemes and it’s the borrower who is disadvantaged.”
ASIC has proposed that the industry ‘move away from’ soft dollar benefits, without specifically mentioning elite broker clubs in their proposals. ASIC’s report did note that “even if criteria for entry are entirely non-volume based, broker clubs may still increase the risk of poor consumer outcomes depending on the nature of the benefits offered under the club.” However, ASIC added that “the benefits granted under the club (e.g. through improved service levels) have the potential to result in better outcomes for consumers going through those brokers.”
Nevertheless, according to White, “these sort of schemes need to go and to my mind, ASIC is possibly on the same wavelength.” The FBAA will be making a submission to the Treasury which will include their response to ASIC’s proposals, along with other industry participants and individuals.
ASIC’s report found nine out of 19 lenders in the review ran broker clubs with a particular concentration towards the majors. Westpac and Commonwealth Bank have long run their Platinum, Diamond Broker and associated schemes, whilst Suncorp unveiled their three-tier Elevate rewards program in 2016. No bank has so far commented on the whether their elite broker schemes will continue.
In their investigations, ASIC found that eight out of nine lenders based qualification for a broker club on the sale of home loans, with one lender considering the sale of white label loans specifically. Whilst finding it difficult to obtain data from lenders, ASIC say their findings “indicate that broker clubs are associated with—if not the cause of—brokers channelling loans to a limited number of lenders.”
White also talked to MPA about the FBAA’s response to ASIC’s other proposals and findings, which MPA will be publishing as part of a special report on the consultation process in MPA’s May issue.
