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Jessica Darnbrough
Treasurer Wayne Swan’s exit fee ban will not only hurt competition in the mortgage market, but broker businesses as well.
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Speaking to The Adviser, Finance Made Easy director Tony Bice said removing deferred establishment fees could ultimately strip competition from the market, which would significantly impact the broker proposition.
“If we don’t have any second tier or non-bank lenders in the market, then we head back to where we were 10 years ago. Customers lose the ability to choose and head straight to a major,” he said.
“Choice is what the broker proposition is centered on. You take away choice and competition and you effectively diminish the need for brokers.
“I think taking away DEFs is a big step backwards for the mortgage industry.”
FYI Group’s Sam Ayliffe agrees and said the legislation was poorly thought out.
While Mr Swan’s exit fee ban was created to ease the majors' lion share of the mortgage market, Mr Ayliffe said the big five never offered "expensive deferred establishment fees, so the legislation will do little to stimulate competition in this regard".
“All this legislation will do is hurt the smaller lenders. The industry needs second tier and non-bank lenders to keep the majors honest and keep the mortgage broking profession alive and well," he said.
