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Brokers are being urged to set aside their fears and cooperate with the corporate regulator’s shadow shopping exercise, which is expected to validate the work mortgage professionals are doing.
Earlier this month, ASIC’s senior executive leader for deposit takers, insurers & credit services, Michael Saadat, told The Adviser that the regulator would be undertaking a shadow shopping exercise of mortgage brokers to ascertain the kind of “advice” that is being given to consumers.
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News of the probe, which comes after the release of ASIC’s remuneration review last March 2017, was met with mixed feelings by brokers.
One broker called the exercise “a joke” and accused ASIC of initiating a “witch hunt” against the broking industry.
“[Are] they doing the same for the banks? [Are] they making sure the banks are providing ‘good consumer outcomes’? No? This is a joke — ASIC ha[s] no clue, and our industry is the target of nothing more than a witch hunt,” the broker said.
However, ASIC has confirmed that it will shadow-shop both the broker and bank channels.
Speaking to The Adviser, FBAA executive director Peter White questioned why any broker would be concerned about the regulator’s shadow shopping exercise.
“If anybody’s concerned about it, my first question is, what have you got to hide?” Mr White said.
The FBAA leader expressed support for ASIC’s initiative, claiming that it provides the industry with an “opportunity to be validated”.
“In all reality, it’s not an uncommon thing for regulators to be doing, and from an industry perspective, as long as everybody’s doing the right thing, there’s nothing to be concerned about.
“Hopefully, if anything, it’ll actually validate that everybody’s doing the right thing.
“This is something that can bring a lot of value to the broker space in reaffirming customer or borrower confidence.
“There’s a positive side to this and that’s what we need to be looking at.”
Further, Mr White noted that brokers who are “doing the right thing” should not be concerned, and he sees ASIC’s exercise as an opportunity for the industry to “sharpen” its practices.
“Treat everybody the same. [If] you’re transparent and doing the right thing, it’s all going to play out fine,” the executive director added.
“I don’t think anybody should be concerned about it.
“If it does put you on your toes a little bit, well, unfortunately, that’s the way it is and maybe it’ll help us to sharpen certain areas that may need further [inspection].”
Mr White’s sentiment regarding ASIC’s “secret shopping” exercise echoes those recently made by the CEO of the Mortgage and Finance Association of Australia (MFAA), Mike Felton.
Also speaking to The Adviser, Mr Felton said: “When you are an industry that is doing the right thing, there is no need to hide from external scrutiny; you use it as an opportunity to improve your industry.
“Broadly, I think that if a broker was faced with a situation where they felt that they were being shadow-shopped, they should do what they normally do — provide a great outcome to the consumer, thoroughly consider the consumer’s requirements and objectives, provide the appropriate set of product choices that match their needs and affordability, and take reasonable steps to determine and verify their financial situation.”
[Related: MFAA highlights ‘opportunity’ from ASIC’s shadow shopping]
