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The mortgage broking industry’s peak bodies have come out swinging in defence of brokers and the third-party incentives provided by the banks.
FBAA chief executive Peter White rejected comments made by the RBA that the increased use of mortgage brokers as a distribution channel is creating risks.
“Finance brokers have had around 50 per cent generation of home loans written for some time and the risks are well known and managed by lenders, so this is nothing new and is extremely well managed by all lenders using this form of distribution,” he said.
“Australian borrowers and the enhancement and development of our lending sectors owe its strength to the professionalism, skills and service levels of finance brokers across the country.”
Mr White noted that using a broker distribution model “doesn’t have any enhanced risks to the borrowers or lenders which are not already there with bank branches”.
“In fact, I would suggest due to the regulations and licensing imposed under the NCCP, borrowers and lenders have never been better protected from risks under this model,” he said.
MFAA CEO Siobhan Hayden also countered the RBA claims, saying they are not supported by any evidence and are based on incorrect assumptions.
“Fifty per cent of new residential lending is introduced through the third-party channel and the number of brokers that have been investigated or convicted is less than 0.5 per cent of the total brokers in the market, demonstrating the ethical and professional nature of the broker profession,” she said.
Ms Hayden noted that loans introduced through the broker channel carry less risk than those sought directly from lenders by consumers.
[Related: Industry slams RBA commission claims]
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