Clawbacks v cashbacks: New MFAA CEO speaks

Ms Pannek, who replaced retiring CEO Mike Felton this month (5 September), brings to the role her extensive experience in the broker and mortgage-distribution space, having held a range of leadership roles at several aggregation and lending companies. 

Speaking exclusively to The Adviser recently, Ms Pannek was keen to point out her passion and priorities for the industry; the need to properly address the issue of clawbacks; and the “wonderful” role that “multigenerational brokers” play in aiding a family’s members’ financial growth.

So, what attracted her to the industry and role in the first place?

“This is an industry that I am incredibly passionate about and I have been for many years,” Ms Pannek explained.

“That comes through firsthand experience having worked in and around the industry in previous roles and then obviously CEO of Plan Australia.

“I think what I’ve also experienced firsthand — and this really goes to the core of why I’m so passionate about this industry — is when you see brokers work with customers and you can see the profound impact they have on their customers lives through guiding them through some really unfamiliar — if you’re a new homebuyer — to familiar ‘but I need a hand in terms of next step’ situations.

“Some of the wonderful things we’re seeing now in industry [is] where you get brokers — I call them almost multigenerational brokers — are advising customers who were children of their original customers. So, they’ve actually seen the impact they’ve had on generations of Australians.”

Role priorities at the MFAA

In terms of her next steps, The Adviser was curious as to what were her order of priorities and what MFAA members can come to expect — and why.

“I know I come into this role as the industry is in a fantastically strong position. And the MFAA is in a really, really strong position as well. That’s a testament to the work of the MFAA and Mike over the last few years,” she highlighted.

“I’m in a really fortunate position because I can hit the ground running.

I know key stakeholders. I know this industry and I know where the challenges are. And I believe I also know where the opportunities are.

“I think with any change of leadership it also gives us an opportunity to just stop and really think about what is it time for now.

“It’s been a really challenging industry for brokers. There’s been a lot of change, but I think if you look at some of the key stats around market share, we came out with [the] largest quarter in history in terms of mortgage volumes through the channel. Good trust; people have confidence in the channel.

“Yet I think there’s still a few challenges.”

Order of tasks at hand

“The number one priority for me is being on the ground and getting feedback from members,” she pointed out.

“This is their association — and I want to hear where they see opportunities and challenges because, at the end of the day, I am their voice and the voice of the industry to key stakeholders.

“Second priority in the coming weeks and months I’ll be meeting very importantly with government, regulators and a number of our key stakeholders — AFCA (Australian Financial Complaints Authority) consumer groups, Treasury, ASIC...

“The reason I think that’s important is that a key pillar of what we do at the MFAA is represent our members and industry. And I really want to work on a no-surprises basis being at the forefront of those conversations as discussions arise around regulation and what needs to happen next, so that’s another key priority of mine.

“There’s obviously a number of pieces of consultation around legislation still in flux, and we’re right all over that and we’ll continue with that.

“Then lastly, when it comes to the challenges, I know that there are challenges [facing] industry right now. And I do believe that there’s a really good opportunity with a new government for us to look ahead, in particular, given the cancellation of the 2020 review, and engage on a number of these conversations.”

The complexity of cashback v clawback

Ms Pannek continued: “The one I do want to call out is, I think we need to have a constructive conversation on clawbacks in this industry.

“There’s been commentary — and I’ve heard it for a number of years around clawbacks — and you know ‘let’s cancel clawbacks’. I think that’s a pretty simplistic approach for what can lead to some pretty challenging circumstances for brokers overall.

“What we know now when it comes to clawbacks is brokers operate under best interest duty and that’s a really high bar overall.

“Clawbacks are, and they’ve always been, a really important control mechanism when it comes to how brokers originate loans for their customers.

“But the reason we need to take a look at this clawback situation in a constructive way across the industry is I think we’re getting this convergence between cashback and clawbacks coming about.

“There’s a lot of activity — I’m sure you know, you speak to brokers, we all do — activity levels are still high, rising-interest rate environments, people are looking for options…

“I think what we’re seeing is customers discharging early in their loan to the detriment of brokers as a result of cashback activity, so I think when we’re seeing that it’s a good opportunity for us to engage in this topic again.”

Asked who she would engage in such a conversation, or whether it was a regulatory or lender issue, Ms Pannek replied: “Well, I think it’s a good point to start understanding if there’s certain activity in industry, for example, you know, cashbacks: how they’re structured, is it making sense in context of best interest duty? And the structure in clawbacks — and we know clawbacks as well, we know clawbacks they are quite clunky. You know, 100 per cent year one, 50 per cent year two — is that the right thing?

“I think that’s the conversation I’m keen to have with the industry, and as and when appropriate with regulators as well for seeing patterns.”

[Related: Anja Pannek named MFAA CEO]