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Are Australia’s broker industry bodies, the MFAA and FBAA, losing their relevance? The Adviser seeks the opinions of the third party distribution channel
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EVER SINCE the introduction of sweeping new changes under the National Consumer Credit Protection Act (NCCP), there has been discussion of the relevance of the broking industry’s professional bodies.
Prior to the introduction of the regulations, both the Mortgage & Finance Association of Australia (MFAA) and the Finance Brokers Association of Australia (FBAA) were responsible for promoting the benefits of using a broker to the general public.
More significantly, they were expected to outline the reasons why it was important to use a broker who was a member of one of the respective industry associations.
According to the MFAA and FBAA, brokers who are members of an industry association are “highly educated and professional”.
But with regulations now in place that require brokers to adhere to responsible lending obligations and hold a Certificate IV in Finance and Mortgage Broking, are the industry bodies still relevant?
While a majority of borrowers may not understand that brokers are now regulated under NCCP, there is no doubt that this will become clearer over time.
The introduction in July of regulatory requirements for financial planners under the government’s Future of Financial Advice reforms is also likely to have a cumulative effect, with consumers increasingly aware that the financial services professions are becoming more accountable.
So again, how relevant now are the MFAA and FBAA? Not very say a majority of mortgage brokers, according to a recent straw poll conducted by The Adviser.
In the poll, 72.3 per cent of the 188 brokers who responded believe the industry associations have lost their relevance.
Todd Hunter from wHeregroup is one broker who believes the various industry associations are “fast” losing their relevance.
Mr Hunter says he doesn’t get “a lot” from his industry association in the way of support or benefits.
“I have been paying my fees for years and haven’t seen any benefits,” he says.
“I’m not sure what goes on behind closed doors. They may be constantly working with the government and ASIC to improve the working situation for brokers, but that gets no air play.”
Mr Hunter said he wouldn’t be surprised to see lenders start dealing directly with brokers who are not MFAA- or FBAA-accredited in the future.
“As lenders get hungrier for business, I expect to see them open the gates and start working with brokers who are not members of the various industry associations,” he says.
“The lenders know the third party distribution channel is legislated and has certain responsible lending requirements to adhere to. As such, they will not feel any concern in dealing with brokers not accredited.
“And, if you ask me, I think this will happen sooner rather than later.”
Not everyone agrees.
Aussie’s Matthew Rose says he doesn’t expect to see lenders dealing with brokers who are not accredited either with the MFAA or FBAA.
“I can’t see lenders taking that approach to business,” he says. “The industry associations do a good job as far as I am concerned. I am more than happy with their services.
“They are committed to the industry and making sure there are no heinous requirements put on brokers.
“Thanks to my industry association I can really go about my business as usual. I am not sure I would be able to do this if they weren’t around.”
