Raising the bar for broking will protect clients and improve the industry's reputation, argues Blake Buchanan
The mortgage broking industry in Australia has come a long way over the past 35 years.
From humble beginnings, it has grown into a sophisticated and highly competitive sector that now writes nearly all new residential loans. Yet despite this success, the entry requirements for new brokers remain a point of concern – and, in many ways, a weakness in the system.
At present, the minimum standard for becoming a broker is a Certificate IV in Finance and Mortgage Broking. While this qualification provides a baseline understanding of lending and compliance, it is far from sufficient to equip someone for the complexities of the role.
Industry bodies encourage new brokers to complete a Diploma of Finance and Mortgage Broking Management within 12 months of starting, but it is not mandated as an entry requirement.
The current framework has contributed to a troubling statistic: around 60% of new brokers fail within their first year. That is unacceptable for an industry that positions itself as a trusted adviser to Australians making life’s biggest financial decisions.
The issue is not simply one of personal failure.
A broker who leaves the industry after a year has still written loans. That means there are clients whose financial future was guided by someone with minimal experience and who no longer have their broker available to help workshop new scenarios, restructure debt or provide ongoing advice.
Why the diploma should be the minimum standard
To strengthen competence and confidence, the diploma should be the minimum entry requirement for all new brokers. This would bring the profession into line with its responsibilities.
A higher initial qualification sets a stronger foundation, but qualifications alone are not enough. What matters most is how new brokers enter the industry and gain real-world experience.
One of the biggest issues lies in the pathway many new entrants choose.
Rather than joining an established brokerage, they set up their own company straight away, becoming their own boss from day one. For those without a finance background, this is almost always a recipe for failure.
They lack not only technical grounding but also the operational support, compliance frameworks and peer learning that established brokerages provide. The data and experience show that those who attempt this path make up the bulk of the 60% who fail.
A smarter pathway
New-to-industry brokers, particularly those without prior financial services experience, must be required to work within a licensed brokerage for a minimum of two years before they are permitted to go out on their own.
This model mirrors the apprenticeship approach seen in other professions. Doctors, lawyers and accountants all undertake structured periods of supervised practice before being entrusted with independent clients. Mortgage broking should be no different.
Working within a brokerage provides structured mentoring by experienced brokers; exposure to a range of scenarios from other brokers; compliance oversight that reduces risk to both client and broker; and operational support such as administration, systems training and lender relationships.
Brokers who start their careers in this way not only survive but tend to thrive.
“Reforming entry requirements is not about gatekeeping; it’s about protecting clients and safeguarding the reputation of the industry”
At the heart of this discussion is the client.
Every loan has long-term consequences for a family, an investor or a business. If more than half of new brokers leave within 12 months, the clients they served are left unsupported.
Reforming entry requirements is therefore not about gatekeeping; it’s about protecting clients and safeguarding the reputation of the industry.
By lifting the bar to a diploma and embedding a mandatory two-year brokerage period for those without finance backgrounds, we ensure clients are served by brokers who are properly trained, supported and committed.
Mortgage broking is a cornerstone of Australia’s financial system. With that role comes responsibility. The current model, with its low entry standards and high failure rates, is not sustainable.
It’s time for the industry to evolve.
By requiring a diploma as the minimum qualification and mandating supervised brokerage experience, we can build a stronger, more resilient profession – one that serves clients better and secures the future of mortgage broking for decades to come.
Blake Buchanan is the general manager of mortgage aggregator Specialist Finance Group (SFG).
