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Delays to processing, poor communication, and issues with lender systems have been flagged by brokers, with the FBAA calling for immediate improvement.
The managing director of the Finance Brokers Association of Australia (FBAA), Peter White AM, is calling on lenders to improve their service level agreements and responsiveness and standardise discharge forms to overcome reported delays in loan processing.
The calls come after a recent FBAA poll found that brokers have been experiencing delays in loan processing over the last six months.
According to the poll - conducted in July by CoreData and sent to 100 FBAA brokers - each broker applied for 49 loans on average in the past year, with an average approval rate of 89 per cent.
However, 60 per cent of finance and mortgage brokers said they had experienced delays in loan processing over the past six months, with 45 per cent citing “poor communication from lenders” and 39 per cent flagging “technical issues with lender systems”.
More than a third of brokers said lenders had “inflexible requirements for borrowers” (35 per cent), while others noted “complex documentation requirements” (31 per cent), “post-settlement issues” (30 per cent), and a “lack of transparency in lending terms” (26 per cent) as difficulties.
Only 7 per cent said they had no difficulties with lenders over the past six months.
White slammed the issues being faced by brokers as “unacceptable” and said the lack of responsiveness from lenders was “frustrating”, particularly as the association has long been calling for standardised discharge loan forms and documentation.
White said: “The fact that so many brokers regularly face these issues when processing loans indicates not only that the system is inefficient, but that some lenders are not making any effort to improve.
“Three years ago we reported that banks were taking 14–30 days to finalise discharge documents, even after many approaches and requests, and I think many brokers still have a distrust of lenders’ motives.”
He said that banks were damaging customer relations through these issues, stating that the more they delay and disadvantage customers, the less likely those customers are to return.
“This recent poll shows that some lenders are still not doing well enough. They need to improve their processes and their communication,” he said.
The FBAA head also said that some lenders may be slowing things down for the third-party channel on purpose.
White said: “Recent comments by the CBA and Westpac have made it clear that some banks are intentionally trying to discourage business through brokers, so it’s not unreasonable for brokers to suspect that delays are being intentionally ignored.
“Lender requirements are largely the same, and universal, standardised loan discharge agreements, loan application forms and privacy act forms should all be available in today’s marketplace."
The call from the FBAA follows on from other issues flagged by the broking industry – the dominant channel for home loans – in relation to ensuring borrowers are able to access mortgages.
In July, both the FBAA and the Mortgage & Finance Association of Australia (MFAA) urged lenders to be more flexible with how they service borrowers, particularly given high serviceability hurdles.
While APRA has maintained that the current 3 per cent buffer is appropriate considering an “uncertain interest rate and economic outlook” and high levels of household debt and inflation still above the Reserve Bank of Australia’s (RBA) target range, White said at the time: “Three per cent, in my mind, is still too high. I’d like it to be around one and a half to 2 per cent.”
[Related: Associations call for more flexibility with serviceability buffers]
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