Broking industry marred by well-worn issues despite high job satisfaction
Job satisfaction across the mortgage and finance broking industry remains high at 71%, according to the latest bi-monthy poll conducted by the Finance Brokers Association of Australia’s (FBAA
Surveying 100 brokers between 23 and 29 July, seven in 10 brokers said they are likely to stay in the industry for the next five years, citing an interest in finance and the ability to run your own business as primary motivators.
90% of brokers view their profession as a long-term career, although more than half admitted to considering leaving the industry at least once in their career.
Many of the stated bugbears are well known.
Clawback issues remain rife
“Aggressive lender practices”, chiefly unfair clawback and net offset policies, topped the list of reasons brokers considered quitting.
The mortgage broking industry – including the FBAA and the Mortgage and Finance Association of Australia (MFAA) – has long advocated but fairer clawback policies.
Data compiled by the FBAA and CoreData earlier this year found eight in 10 brokers were affected by clawbacks over a 12-month period, with nearly half of polled brokers losing over $10,000 each due to lenders’ clawback policies.
Brokers such as Terri Unwin of Mortgage Choice believe there must be leniency in cases of divorce or death, or, as Unwin recently told MPA, “something a broker has absolutely no control over”.
A broker surveyed by the FBAA echoed these comments, saying: “Why are we still paying clawbacks, especially when loan discharge is no fault of the broker? Why are we still receiving the same commission percentages vs when I started eight years ago, given the extra work that goes into each file?”
Read more: The case for and against clawbacks
While major banks tend to have the strictest clawback provisions, numerous alternative lenders like ORDE Financial and La Trobe Finance have scrapped their clawback policies under their broker-first approach.
The evergreen channel conflict debate
Channel conflict concerns also cropped up in the survey.
One surveyed broker accused the major banks of “pulling their support from brokers by establishing their online banking channels, giving customer extra rate discount if they reach through direct channel, openly discouraging customers to go to brokers etc”.
While channel conflict is less of an issue today than it used to be, the debate has reared up again in recent months.
The concept – where lenders compete with brokers by offering borrowers better deals, faster approvals, or exclusive incentives for going direct – first took root in the early 2000s, as brokers began establishing themselves as a powerful force in mortgage finance.
Major lenders, including Commonwealth Bank, Westpac and most recently ANZ, have revitalised their focus on proprietary and digital mortgage lending, with ANZ chief executive Nuno Matos just this week lashing out at “disintermediation” within the group. This was seemingly a swipe at third-party intermediaries like mortgage brokers, from which a majority of ANZ’s home lending volumes are sourced from.
While FBAA managing director Peter White (pictured) was encouraged by the high satisfaction levels, he was unsurprised that aggressive lender practices like clawbacks remain a major source of frustration for brokers.
Aggregators called out
Though further down the list of grievances, mortgages aggregators copped a few unsavoury words from surveyed brokers.
“Increasingly, there is less and less support for sole operators who need business guidance and process,” said one broker. “Aggregators have too much control and seem to only focus on the bigger groups that bring them in more money.”
Another broker said: “Brokers are being asked to do more work on each loan application, are then often dealing with poorly trained lending staff who need to be handheld in seeing the justification for approving loans and when there is a conflict over this, the aggregators side with the lender more than the broker or as has happened in a recent case for me remain silent.”
A total of 6% of brokers cited “aggregator issues” as a reason for considering quitting.
Stress levels rising
Brokers are also struggling with work-related stress and financial strains.
“This feedback demonstrates the impact these issues have on brokers and their willingness to stay in the industry, and is the reason why the FBAA has been so vocal and continues to advocate for change,” said White.
“It’s a long journey but we have started to see breakthroughs that some never thought we would see, which encourages us to continue the fight against practices that are unfair.
‘Our message to members is to talk to us about how they can improve and succeed, as we exist to help brokers thrive in all aspects of their business and CPD,” he said.
Other cited issues included compliance concerns, issues with government policy and practices, and lack of support.
