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The MFAA has defended the educational standards of brokers and dismissed the “old chestnut” that commissions influence recommendations.
The association told a parliamentary joint committee into ethics and educational standards that MFAA brokers must “exceed the regulatory education standards required of lender staff by NCCP”.
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The MFAA’s submission also noted that it had cancelled the memberships of a combined 2,600 brokers in 2009 and 2013 for not meeting educational standards.
Those standards help explain why “the mortgage broking channel has had no Westpoint, Storm or CBA-type financial planner disasters”, according to the MFAA.
“However, while MFAA has placed a strong emphasis on education standards, we are conscious of simply raising standards for standard’s sake,” it said.
“The standards must be relevant to improving professional conduct and consumer protection. Supporters of further higher standards need to be able to demonstrate which ‘wrong’ they are attempting to remedy.”
The MFAA also said dismissed the “old chestnut” that brokers would recommend inferior products because they pay higher commissions.
“A few basis points are neither here nor there to the broker. Further, the key factor in determining which lender to recommend is how quickly the loan can be approved,” the MFAA said.
“This is the uppermost thought on consumers’ minds and, accordingly, is the key factor motivating brokers.
“To be motivated by a higher commission would be a breach of the NCCP requirement to ensure there is no disadvantage to clients as the result of any conflicts of interest they may have.”
[Related: MFAA tells APRA to give brokers more respect]
The Adviser will explore the issue of industry education in greater depth in next month's magazine.
