Late last month ASIC released Report 628, titled ‘Looking for a Mortgage: Consumer experiences and expectations in getting a home loan’. In it they concluded that brokers must better communicate to customers how the home loan options presented were selected for them.
Commissioner Hughes went on to say “There needs to be a conversation up front, whether the arrangement is being done through a broker or direct to a lender, as to what a customer’s actual needs and requirements are. It’s about looking at it through the eyes of what’s most important to your customer: what are the features, circumstances, and pricing they’re seeking to get here? How can you give them the best number of options possible?”
Furthermore, and jumping on the back of this report, consumer group Choice has launched a new attack on the industry. Choice CEO said, “We have a major competition problem in the home loan sector but the mortgage broking sector isn’t fixing it – it’s making it worse. Mortgage broking can and must be better. Australians, particularly younger, less experienced and less wealthy borrowers, are relying on mortgage brokers to get them a fair deal. They should be able to get advice they can trust”.
The scrutiny on Finance Brokers, whether fair or not, continues to grow!
Whilst the scrutiny and criticism continues, we are well served by strong industry associations such as FBAA and MFAA. In response to Choice’s comments, FBAA Managing Director Peter White said, “I thought Choice was meant to provide an independent and unbiased assessment, yet here they are again making extreme, unsubstantiated claims”.
So, what is it that YOU can do to protect yourself and your business from above criticisms?
Putting your head in the sand won’t help. With news like this in the press, customer complaints are also likely to rise. Therefore, we encourage all Finance Brokers to get on the front foot.
Here are some easy to implement steps that will help protect you and your broking business:
- Implement customised and documented operating procedures for all people within your business involved in the credit assistance process.
- Ensure you and your team comply with all regulatory disclosure obligations; therefore, enhancing the transparency of your conduct.
- Attend a refresher training course on Responsible Lending guidelines to ensure you are conducting yourself correctly and that you fully understand the current regime.
- Regularly conduct internal compliance audits across all brokers to ensure consistently strong processes apply.
- Arrange an external compliance review of your business, including recently settled file audits.
Even when doing things “by the book”, complaints and criticism can never be eliminated.
To that end, we AGAIN raise our favourite topic of Notes, Notes and Notes! The details of your notes and the consistent use of them is a simple but powerful way to protect yourself.
We founded SalesKey with an objective to share our knowledge of Finance, Lending, Broking and business management. It’s our passion and if we can help in any way, including addressing any of your concerns about the robustness of your business, don’t hesitate to call us on 1800 954 488.
