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'Mortgage brokers are critical to the Australian economy'

6 minute read
The Adviser

Trail commissions and mortgage brokers have been credited with easing the effects of the GFC and powering the Australian economy.

Connective director Mark Haron told an aggregation leadership round table that if not for trail, "there would have been very few mortgage brokers left after the GFC", as in the US and UK.

"The fact that brokers were getting paid trail commissions enabled them to continue to operate and for the banks to come back into the market very quickly and start lending to Australians," he said at the event, which was hosted by The Adviser and Genworth.

"It also enabled the Australian economy to power on. Without mortgage brokers and without trail commissions, we would've had a really stagnant economy for a long time.

 
 

"I would say mortgage brokers are critical to the Australian economy – and so is trail commission."

Mr Haron's comments come after the Financial System Inquiry received several submissions that criticised commissions, with EY (Ernst & Young) being one party to suggest possible changes to trail.

Deloitte partner James Hickey backed Mr Haron's statement on the importance of brokers, and said the economy would suffer if lenders handled all mortgages.

"It's worthwhile being clear about the value-add that brokers provide," he told The Adviser.

"It's not just finding the best product with the best features and best price; it's also the broker guiding the client through the process and holding their hand."

Mr Hickey said brokers have made the mortgage sector more efficient through their specialised knowledge and software platforms.

Brokers also facilitate the risk assessment process by ensuring that borrowers provide lenders with all the necessary documentation in a clean submission, he added.

The MFAA's new chief executive, Siobhan Hayden, said brokers also help clients improve their financial position in a way that lender staff sometimes don't.

For example, a broker may consolidate a borrower's credit card debts as part of a mortgage, Ms Hayden said.

"Bundling those credit cards and refinancing them and getting rid of them under a housing structure potentially may not be done in a lender structure," she told The Adviser.

[Related: MFAA defends brokers at parliamentary inquiry]

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Comments (4)

  • <p>Have known Mark Haron since I started broking 15 years ago and he has always been a strong advocate for the broker market. Well done Mark. &lt;br /&gt;Also agree with Siobhan's comments about lender staff not always doing the right thing by clients. Had a client who was refinanced by local branch manager of one of the majors and they were left with four credit cards all maxed out with sufficient equity in their home to easily refinance these. The clients were told they couldn't consolidate the cards. &lt;br /&gt;We need more positive commentary like the statements in this article from our aggregator and industry body leaders.</p>
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  • <p>Well Said Mark! It's time we stopped apologising for what we do and proudly publish the benefits of our industry.</p>
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  • <p>Good to finally see some positive commentary on trail commissions. i hope we will see the other Aggregator Heads coming out to support Mark's comments.</p>
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  • <p>Mr Haron is a very wise man and that is why I choose to be with Connective.</p>
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