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CBA has warned that some segments of the broker industry face a wakeup call when broker legislation comes into force next year, however a stronger industry will emerge as a result.
Speaking at a media luncheon on Wednesday, CBA’s executive general manager of third-party banking Kathy Cummings said that forthcoming legislation will make brokers accountable, giving them greater responsibility in client assessments, however she believes that many will struggle with the new regime.
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“If brokers are to become more professional they need to understand that they have to comply.
“The industry needs to up its standards,” Ms Cummings said.
According to Ms Cummings, while some brokers are already compliant with the new requirements a significant number are well off the mark.
“The MFAA has required a high level of professionalism and education from members for some time – it will now become law,” she said.
However while some brokers may struggle to meet new standards Ms Cummings believes that those who adapt have a bright future.
“With the right approach, there is great growth potential for the broking industry. It is customer sentiment that drives the broker space and there is no reason why this shouldn’t grow.”
National finance broking legislation will come into effect in the near future, removing fragmentation and state specific legislation.
According to the MFAA, it will improve professionalism in the industry and regulate all broking structures, including mortgage brokers, finance brokers, single line broking and single mobile operators as well as aggregators and franchised organisations.
The US and UK broker markets have suffered severe decline in the wake of the financial crisis however the Australian industry has stood firm.
Brokers in the domestic market have seen little or no decline in their share of the home loan market – still accounting for around 40 per cent of new business.
Ms Cummings said that a significant volume of CBA loans come via the broker channel.
“Around 40 per cent of our home loan business is generated by brokers. We are committed to supporting brokers – they are very important to CBA – however it must be sustainable business.
“We’re in a rapidly changing market and brokers need to keep pace with CBA policy – the only way to be sure of that is by writing business on a regular basis.”
