First published 18 July 2019.
The Mortgage & Finance Association of Australia (MFAA) has today expressed disappointment that its membership and the mortgage industry has been misrepresented by a CHOICE media release regarding broker education and accreditation.
The release makes a number of statements which are misleading including stating that mortgage brokers only require a Certificate IV in Finance and Mortgage Broking to work in the industry.
The MFAA represents more than 13,000 Australian mortgage brokers. Every MFAA Accredited Finance Broker is required to complete a Diploma of Finance and Mortgage Broking Management, and two years of mentoring amongst many other requirements. The Association made this change to the higher education standard in 2013.
MFAA CEO Mike Felton said he was disappointed by the media release, given the extraordinary scrutiny the industry has been under in recent years, and the successful efforts the Association has made to lift education, professionalism and ethical standards for MFAA member brokers.
“CHOICE’s media release is irrelevant to the majority of mortgage brokers in this country. It is disheartening to see these continuing attacks on our industry, given the many years of reviews by ASIC, the Productivity Commission, the Sedgwick Report and the Hayne Royal Commission which found no evidence of systemic harm to consumers resulting from mortgage brokers’ activities,” Mr Felton said.
“In fact, reviews have found that brokers play a key role in driving competition, choice and access to credit for consumers. More than 96 per cent of broker customers report they are satisfied with their brokers’ performance(1), which is why consumers are now going to brokers for 60 per cent of all mortgages. They want the industry experience, choice, convenience and service that brokers provide.”
The mortgage broking industry continues to reform through the Combined Industry Forum (CIF) in response to the outcome of the various reviews including actively progressing the development of a Best Interest Duty to customers – both within the CIF and with policymakers.
“If consumers were unhappy with their brokers, it would show up in our satisfaction surveys, or in complaints data,” Mr Felton said.
The Australian Financial Complaints Authority (AFCA), during its first six months of operation, found that mortgage brokers accounted for a low 107 of the 35,263 complaints to AFCA, or just 0.3 of one percent, which is phenomenal considering brokers are responsible for 60 per cent of all mortgages written.
“Given this data, it seems to me that perhaps CHOICE’s publicity efforts would be better directed elsewhere in the financial services industry,” Mr Felton said.
Contrary to the campaign from CHOICE, the MFAA has stressed that it has always supported improved education levels, and accordingly moved to a higher education level of Diploma for Accredited Finance Broker members many years ago – along with its mentoring program.
In addition to a Diploma and two years of mentoring, MFAA members are required to complete 30 hours of Continuing Professional Development each year (the statutory requirement is 20 hours).
The MFAA is committed to ensuring that ethics content is to be included in all levels of education in the industry going forward, and is working with PwC, Registered Training Organisations and aggregators on the review of broker education.
Mr Felton also pointed out the benefits that the raised bar provides for the industry, and for consumers, in ensuring brokers are experienced and professional.
“On average, Mortgage Brokers have 13.8 years of industry experience (2), and they must hold an Australian Credit Licence or be a representative of an Australian Credit Licensee in order to conduct business. They require professional indemnity insurance, and they must be a member of the AFCA external dispute resolution scheme,” Mr Felton said.
“Brokers require accreditation by their aggregator and individual lenders before being permitted to recommend their products and are subjected to a strict vetting process when joining the MFAA including police and credit checks.
“They also provide enormous benefits for consumers in the form of competition. They provide consumers with access to an average 34 lenders (3), which allows them to actively drive competition, with only 45 per cent of mortgage broker originated loans going to the four major banks (4).
“This combination of education, industry experience, and breadth of choice offered, leaves an MFAA broker exceptionally well placed to guide and provide assistance to a customer contemplating what is, in most cases, the single largest finance decision of their life time.
“The MFAA remains committed to ongoing improvement in broker education and will continue to engage with Treasury, ASIC and the entire industry to ensure education standards for brokers remain appropriate,” Mr Felton said.
(1) Momentum Intelligence 2019.
(2) Deloitte Access Economics, 2018.
(3) Deloitte Access Economics, 2018.
(4) MFAA Industry Intelligence Service – 7th Edition by CoreLogic.