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Independence issues and lender/broker relationships are increasingly in the spotlight. This month we ask...should brokers who consistently write loans for one or two lenders be considered 'agents'?
“The term ‘broker’ infers that borrowers will get a choice. However, if you are sending more than 60 per cent of all your business to one particular lender, can you really call yourself a broker? At what point do you stop being a broker and start being an agent for one particular lender? Ultimately, brokers send the majority of their business to one or two lenders because of minimum volume requirements and the various segmentation models employed by some of the banks.”
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DAMIAN PERCY
Bendigo and Adelaide Bank
“If a broker is constantly writing loans for one or two lenders then, in principle, they are acting as an agent of the lender, but I can’t see the banks ever wanting to have that official legal tie or that bind. I know that ASIC has a real issue using the word ‘independent’ because you can’t really be independent unless you’re charging a fee for service. When you’re aligned that closely with one or two lenders, it can create some problems.”
PETER WHITE
FBAA
“I think it depends on the lenders that they consistently use and whether those lenders have the best products and rates. It does bring into question whether they’re doing the right thing by their clients because various lenders run different promotions at different times. These promotions aren’t quarantined to one or two lenders, so to get the best for their clients brokers should be looking at a varied panel to ensure they get the best deal.”
TIM BROWN
Vow Financial
“So long as they let their clients know the situation, I don’t think it is a problem for brokers to offer one or two lenders. I don’t often see cases where brokers send the majority of their business to just one lender. If a lender says they require six loans in a quarter, then a broker will send them six loans in one month and they feel like their job is done. They tick that box. Often these minimum volume requirements actually become a limiter for the banks.”
GERALD FOLEY
nMB
“I don’t think it is a problem for a broker to sell the products of one or two lenders, so long as they disclose this to their clients. It is all around disclosure. At the end of the day, most lenders segment their brokers in one way or another. As such, it is only fair to assume that brokers would send the majority of their business to one or two lenders – lenders whose top performing segment they happen to be in.”
MARK HARON
Connective
