The MFAA questions the way UBS has represented the results of its recent consumer survey, given they do not reflect ASIC’s data. We particularly question UBS’ comparison of misrepresentation in the “Banker vs broker” channels, given that the actual data show us that default rates experienced on loans originated through the two channels are quite similar, once controlled for demographic differences.
The MFAA relies on actual data collected by ASIC as the source of truth in these matters. ASIC has clearly stated in its Review of Mortgage Broker Remuneration that brokers provide great outcomes for the consumer.
ASIC data also reports extremely low numbers of brokers being deregistered, despite the fact that there are more than 16,000 mortgage brokers in the industry. Consumers continue to express high satisfaction with brokers, and this customer satisfaction continues to drive referrals. Indeed, more than 53 percent of mortgages are now originated by brokers.
UBS has implied in its commentary that brokers are not fulfilling their obligation to act as professionals, or that they are placing consumers into high risk lending that they cannot afford. The findings simply do not match the reality of the consumer experience, nor ASIC’s actual data into mortgage outcomes.
We believe this research conducted by UBS does not fully consider the operating model of brokers, nor acknowledge the legal responsibility of consumers to provide full and honest disclosure in the application stage of the loan process, nor the responsibility of lenders to appropriately verify the client’s financial situation and ensure that the loan is affordable.
We can see that there is the potential for consumers to imply that they did not fully disclose all the facts during the application process. However, the broker, acting as an intermediary in the lending process, is reliant on the customer’s disclosure and obliged to follow well-established processes to collect the data from consumers, including taking all reasonable steps to determine and verify the clients' financial situation in order to facilitate a successful loan. Whilst the broker is an intermediary in the process with a significant role, final responsibility for approving or declining a loan has to lie with the lender.
Ultimately, in reviewing the performance of mortgage brokers in the lending process, the MFAA will continue to benchmark against data provided by the regulator, and actual consumer outcomes, rather than consumer surveys.