MPA surveyed elite brokers on whether broking can regulate itself, as Combined Industry Forum discusses future of remuneration
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MPA surveyed elite brokers on whether broking can regulate itself, as Combined Industry Forum discusses future of remuneration
Brokers are broadly in support of self-regulation but only when accompanied with significant protections for consumers, an MPA survey has found.
MPA asked applicants to this year’s Top 100 Brokers report: ‘Do you think the mortgage industry can effectively self-regulate, whilst protecting consumers?’ The respondents included some of the best known and highest volume-writing brokers in Australia and gave detailed and extensive answers.
77% of respondents replied that self-regulation could succeed; compared to 18% who believed it could not (the remaining 5% were non-committal).
A Gold Coast broker summed up the view of many respondents: “I believe it can and it is important that it does so. If it was regulated by the government or a third party who does not understand the intricate fundamentals of this industry & profession it may/likely would result in unintended consequences creating negative consumer outcomes.”
Many of the brokers in favour demanded extra protections for consumers: “Yes I do”, replied one Perth broker “This, however, can only happen if we take a hard line and increase mentoring supervisory requirements, increase minimum education / competency levels along with having an effective whistle-blower provision.”
Protections for consumers
The survey is particularly relevant as the MFAA and FBAA are currently engaged in the Combined Industry Forum on behalf of brokers.
Whilst not all participants in the forum use the term self-regulation, the forum’s purpose is to come up with new rules for broker remuneration, public reporting and governance by November, although these will need to be ultimately approved by the Treasury.
Respondents to MPA’s survey made suggested a variety of ways to increase consumer protections. These included stricter mentoring requirements, increased educational standards, processes for removing problem brokers and cooperation with consumer groups.
Brokers put particular emphasis on the role of aggregators in self-regulation. ASIC’s Review of Mortgage Broker Remuneration also called for aggregators to take more responsibility for consumer outcomes, although aggregators argue that lenders have more influence in many cases.
The ‘Nos’
Whilst a minority, the respondents who selected ‘no’ made strong arguments for why the industry requires external regulation.
“I believe every industry requires an independent body to assist regulate our industry,” wrote one Sydney broker, adding that “while I trust that most of us out there will do the right thing by our customers. It is important for the general consumer to have an avenue to go through in the event of a dispute.”
Other brokers pointed towards the level of inexperience in the industry, conflict of interest issues and bad consumer outcomes in the car finance sector as reasons why self-regulation could not succeed.
Many of these respondents also voiced support for ASIC and its work regulating the industry. A broker from regional Victoria told MPA that “I feel that being regulated by ASIC is fantastic for the industry as it weeds out some of the old school brokers that are doing the wrong thing by both clients and our industry. Some brokers do need to be regulated by a higher body as it clearly defines and sets the goal posts for the industry. I don't feel it is a good idea to self-regulate as it could become damaging for the industry; especially given the media and bigger banks that are trying to slow the industry.”
Are you a top broker? Prove it!
Brokers are broadly in support of self-regulation but only when accompanied with significant protections for consumers, an MPA survey has found.
MPA asked applicants to this year’s Top 100 Brokers report: ‘Do you think the mortgage industry can effectively self-regulate, whilst protecting consumers?’ The respondents included some of the best known and highest volume-writing brokers in Australia and gave detailed and extensive answers.
77% of respondents replied that self-regulation could succeed; compared to 18% who believed it could not (the remaining 5% were non-committal).
A Gold Coast broker summed up the view of many respondents: “I believe it can and it is important that it does so. If it was regulated by the government or a third party who does not understand the intricate fundamentals of this industry & profession it may/likely would result in unintended consequences creating negative consumer outcomes.”
Many of the brokers in favour demanded extra protections for consumers: “Yes I do”, replied one Perth broker “This, however, can only happen if we take a hard line and increase mentoring supervisory requirements, increase minimum education / competency levels along with having an effective whistle-blower provision.”
Protections for consumers
The survey is particularly relevant as the MFAA and FBAA are currently engaged in the Combined Industry Forum on behalf of brokers.
Whilst not all participants in the forum use the term self-regulation, the forum’s purpose is to come up with new rules for broker remuneration, public reporting and governance by November, although these will need to be ultimately approved by the Treasury.
Respondents to MPA’s survey made suggested a variety of ways to increase consumer protections. These included stricter mentoring requirements, increased educational standards, processes for removing problem brokers and cooperation with consumer groups.
Brokers put particular emphasis on the role of aggregators in self-regulation. ASIC’s Review of Mortgage Broker Remuneration also called for aggregators to take more responsibility for consumer outcomes, although aggregators argue that lenders have more influence in many cases.
The ‘Nos’
Whilst a minority, the respondents who selected ‘no’ made strong arguments for why the industry requires external regulation.
“I believe every industry requires an independent body to assist regulate our industry,” wrote one Sydney broker, adding that “while I trust that most of us out there will do the right thing by our customers. It is important for the general consumer to have an avenue to go through in the event of a dispute.”
Other brokers pointed towards the level of inexperience in the industry, conflict of interest issues and bad consumer outcomes in the car finance sector as reasons why self-regulation could not succeed.
Many of these respondents also voiced support for ASIC and its work regulating the industry. A broker from regional Victoria told MPA that “I feel that being regulated by ASIC is fantastic for the industry as it weeds out some of the old school brokers that are doing the wrong thing by both clients and our industry. Some brokers do need to be regulated by a higher body as it clearly defines and sets the goal posts for the industry. I don't feel it is a good idea to self-regulate as it could become damaging for the industry; especially given the media and bigger banks that are trying to slow the industry.”
Are you a top broker? Prove it!
MPA's Top 100 Brokers Report is currently open for applications and it takes just two minutes to apply. Winners will be featured in the magazine and online.
http://survey.keymedia.com/au/mpa/2017/top100/
