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Jessica Darnbrough
The term 'mortgage broker' may become redundant as the industry becomes increasingly diversified, one stakeholder has claimed.
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Speaking to The Adviser, ING DIRECT’s executive director, distribution Lisa Claes said diversification would become the norm not the exception moving forward, forcing brokers to reconsider their current professional title.
“I think there will be a gradual homogenisation of the third party adviser,” Ms Claes said.
“In the future I’m not even sure the industry will continue to be called mortgage brokers in the sense that more will diversify their financial service offering than has been the case historically.”
According to Ms Claes, ING DIRECT is already seeing a greater number of brokers look to diversify their core offering away from residential mortgage products.
“On our books, we are seeing an increasing number of brokers diversifying. And, of that increasing amount, we are seeing that an increasing proposition of their business is no longer coming from mortgages. As per our own data, of those that diversify, up to 40 per cent of their revenue is coming from non-mortgage products,” she said.
This is not the first time the term 'mortgage broker' has been put under the spotlight.
In 2010, the MFAA redefined exactly what constitutes a professional broker and encouraged all of its members to become fully qualified ‘professional credit advisers’.
To become a professional credit adviser, the MFAA created a framework that required all members to meet certain educational standards.
“The position earlier was that brokers were not advisers, because they did not want to be caught under the Australian Financial Services licensing regime,” Mr Naylor said at the time.
“However, we will have our own legislation now – the National Consumer Credit Protection Act – and this will change the face of how the whole mortgage broking industry is perceived by consumers,” he said.
Aussie chief executive officer Stephen Porges agreed and said NCCP would force brokers to do a lot more than sell mortgages which should, in turn, encourage them to re-phrase what they call themselves.
“Looking five years down the line, a mortgage broker will have to make the swap into financial advising. I don’t think a lot of people get that yet and I think some of the mortgage brokers still believe they will be just selling mortgages,” he said.
“Home buyers are savvier than ever. They don’t just want someone that can sell them a mortgage, they want an adviser that understands their financial situation and their financial goals. They want someone that can cater to all their financial needs."
