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No major reforms will emerge from the royal commission that will “sink the Titanic”, claims the managing director of the FBAA.
As the industry awaits the release of the royal commission’s final recommendations on broker remuneration, Peter White, the managing director of the Finance Brokers Association of Australia (FBAA), has said he firmly believes that “we’re not going to be seeing anything that will sink the Titanic by any means, but there’s still a bit of nipping and tucking that’s going to happen.”
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“Yes, there’s going to be a little bit of change. We’ve already seen it with things like negative offset. There [are] going to be minor tweaks here and there, but nothing major,” he said.
“[Brokers] will still be able to run their business and earn their income after those reforms come in.”
Mr White noted that, based on his discussions with ministers from the Liberal and Labor parties, the government is more interested in facilitating cultural changes in the financial services sector than introducing regulatory reforms.
“I think the thing we need to focus on is that, culturally and ethically, the way we conduct business is sound and solid, because this is where the banks have lost their traction and we don’t want to fall into the same trap,” the FBAA managing director said.
“I don’t think there’s systemic cultural issues within the broking sector. There are always pockets of people who do wrong, and those people need to be thrown out, but that’s a part of business and everyday life.”
He also pointed out that changes to credit policy in the aftermath of the royal commission should not be dreaded, because “it happens all the time” and “businesses should be ready and adaptable for any changes”.
“I know a major group that has a number of aggregators under its banner that has seen something like 10,000 changes in credit policies in 12 months. Changes in credit policies is something we always need to be prepared for, no matter what caused those winds of change,” Mr White said.
“When people talk about [loan] applications and so forth, these things all have to be spot-on, unquestionable and able to stand the test of any scrutiny.”
According to Mr White, the broking industry should not be “waiting for the storm to pass” but should be “learning to dance in the rain”.
“The positive outcomes from brokers are immeasurable; there’s so many of them… So, switch off the doom and gloom… If we’re going to predestine ourselves to fail, we will fail,” he said.
“We need to stay positive, focused, and keep writing business.”
The FBAA managing director suggested that brokers ensure they have a strong support network around them.
“Make sure the people around you – your aggregator or mentor or association – genuinely cares for you as a person and is there to support you when things get a bit tough. We’ve got to support one another,” Mr White said.
[Related: Improved transparency and oversight will reduce fraud: FBAA]
