From the MFAA CEO, Mike Felton.
Originally published 23 March 2018.
As you are aware, in recent weeks there has been an enormous amount of public conversation about our industry, and the entire financial services sector, emanating from the activities of the Royal Commission and the Productivity Commission.
Much of it has been extremely sensational in nature, and a lot of what has been said and reported about our industry is simply not consistent with the outcomes and value you create for your customers. I have no doubt this is causing you a great deal of stress and concern.
However, while this is most unsettling, I must emphasise three key issues that - in our view - are the most important elements to remember about this ongoing series of disruptions.
A focus on Government decision-makers
The first is that Treasury and ASIC are key stakeholders in the Government decision-making process for our industry. Government will, of course, take recommendations from various reviews and inquiries, but ASIC and Treasury will play very significant roles in the process. ASIC, in particular, has conducted its own extensive, data-driven review and continues to engage privately with industry representatives, such as the MFAA, to gather its own information.
To that end, we are most fortunate that our industry had the foresight to unite in 2017 in an unprecedented manner through the Combined Industry Forum (CIF), demonstrating our professionalism and commitment to strong customer outcomes. This gives us credibility and shows that we are not just reacting to recent events.
The MFAA took a leadership position as the CIF addressed ASIC’s Remuneration Review recommendations – and a significant package of CIF reforms was agreed in November last year, well before the commencement of this new round of inquiries and public hearings in 2018. While ASIC made six recommendations for improvement in our industry, it is worth noting they made no finding of systemic harm to consumers. A view that was echoed by the Sedgwick Review which also concluded in 2017.
The CIF is already implementing reforms for many of the issues currently being re-examined, with a strong focus on improving transparency, disclosure, informed customer choices, conduct, culture, remuneration structures and governance.
We delivered a comprehensive, evidence-based submission to the Productivity Commission on Wednesday (21 March 2018), which answers all the points the Commission raised in a comprehensive and compelling manner. We will soon be arranging a meeting with the Commission to discuss further.
At the same time, the MFAA is spending a considerable amount of time with Government to ensure that decision-makers understand that we are ahead of the curve on reform and that they can be confident that we are making progress and have matters in hand. We were in Canberra last week, I am in Canberra today and will be here again on Monday, meeting with all levels of Government. I can assure you that we are aggressively advocating on your behalf.
The MFAA will continue to vigorously defend our industry at all times, but we will do so in a manner that works within Government protocols and is reflective of the professional industry we represent.
We will not engage with Government via the media
The second key issue I want you to note is that Government and regulators are not interested in playing out these discussions in the media. Indeed, disclosure of the details of confidential meetings with Government is deeply counter-productive and damaging to our cause.
We will not be naming the individuals with whom we are meeting, nor providing regular broadcasts about the details of these confidential meetings to our members or in the media – much as we would like to at times.
To do so would be contrary to accepted protocol, and would be completely inappropriate for the Government representatives with whom we are meeting. It would result in them being reluctant to engage with us going forward, or simply no longer viewing us as a professional organisation. This would obviously be counter-productive.
The MFAA has a voice that is listened to, and a seat at the table. This means we must be careful and responsible about the way we use that voice, so that we can continue to influence key decision-makers and ensure they have the confidence that our current approach – self-regulation via the CIF – is viable and progressing well, and does not require further onerous regulation. This is critical for the sustained success of our industry.
This also extends to the media, particularly during a time when media outlets are reporting extensively on the conflict and tension created by various inquiries, rather than the issues themselves. The allegations are the story right now.
We are monitoring media coverage and where a journalist gets it wrong, we immediately contact them. We will always express our indignation (as we did last week) on behalf of the industry that has been smeared by inaccurate reporting, but we will also seek to educate and inform.
In this environment, when there are daily allegations in the media about poor behaviour by a range of institutions, our goal is to inform, not alienate.
Timing is important
Finally, you and I know that much of what has been portrayed about our industry in recent weeks is not reflective of the reality for hard-working, diligent brokers, nor your customers.
The MFAA is providing a counter message to this to correct the record through our various submissions, in our ongoing meetings with key decision makers and in the media, but the timing of these messages is critical to ensure we are neither adding fuel to the fire nor competing with negative news.
We will continue to work tirelessly and in a highly effective manner to advocate on your behalf, and will keep you informed of our progress.
Thank you all – as always – for your ongoing support.
Chief Executive Officer
Mortgage & Finance Association of Australia (MFAA)