The MFAA is our governing body & they have conducted analysis during 2018, examining complaints, arrears, penalties and the broker channel's impact on competition.
The review commenced by reviewing complaints to the MFAA, the Credit and Investment Ombudsman (CIO) and the Financial Ombudsman Service (FOS). While broker-originated loans written annually have doubled since 2008, complaints to the MFAA have plummeted by 78 per cent.
In addition, while mortgage broker membership of the CIO service has tripled since 2008 - to 91 per cent of CIO membership - complaints about brokers represent just 6.1 per cent of all complaints to the CIO. Mortgage brokers also account for just 1 per cent of complaints to FOS.
When we reviewed penalties data, we found that ASIC has made just 15 convictions of brokers between 2010 and 2017, which represents one in 9,000 brokers per annum.
When reviewing arrears, ASIC data showed there is no significant difference between the broker channel and the proprietary channel, and ASIC also noted in its Review of Mortgage Broker Remuneration that there is no significant relationship between the level of broker commissions and the level of loan arrears.
Brokers bring greater competition which is why I feel we have seen self serving commentary to the extent we have. The rise of the broker channel has significantly moderated the dominance of the major lenders over time, significantly reducing their market share. In the last four years alone, the share of broker channel mortgage business concluded directly with the four major lenders declined from 58.5 per cent to 50.7 per cent, and the percentage of loans originated by brokers for lenders not affiliated with the four major lenders has grown from 21.5 per cent to 28 per cent.
At the same time, as broker numbers and the broker channel's market share have both increased - driving increased competition - the Net Interest Margin of the major lenders has decreased commensurately.
These recent criticisms are a clear reflection of the pressure being felt by the entire financial services sector to drive revenue and margins – and to respond to the Royal Commission. It is tough for the sector, but that same pressure and increased competition is great for consumers.
RFS
At RFS we have assisted over 6,000 Australians buy a home, with loans of over 2.4 thousand million. In addition we have funded countless vehicles, equipment, machinery, & assisted hundreds of business owners achieve their business dreams of buying or expanding...... all without ever being accused of wrong doing.
We have a tight knit team of consummate professionals who take great pride in serving our clients.