AFG (ASX:AFG) has today welcomed the federal government’s recognition of the important role mortgage brokers play in the financial sector and the support they provide to Australian homebuyers.
AFG CEO David Bailey said: “On behalf of our members and AFG, we applaud the acknowledgment by the federal government that a further review of mortgage broker remuneration by the Council of Financial Regulators and the ACCC is not required.
“This is positive news not only for AFG brokers but also the wider mortgage broking industry and all Australian consumers who rely on their service.
The mortgage broking industry offers convenience, choice, and access to credit. By driving competition, mortgage brokers keep prices low for all borrowers. “Years prior to the Royal Commission, the industry undertook significant self-regulatory initiatives, working with regulators and government to roll out a series of proactive reforms.
In addition, since 2019 the government has introduced reforms and legislated changes, including a Best Interests Duty, an unrivalled higher duty to align broker and customer interests and expectations; legislation to address reforms to Conflicted Remuneration and improvements to information sharing and reporting of misconduct, including a Reference Checking Protocol, a Breach Reporting regime, and improved processes around notification and remediation of misconduct for consumers.
“These reforms – alongside brokers’ dedication to customers – have produced incredible data on positive customer outcomes, reinforcing that mortgage brokers support competition that is critical to the Australian economy.”
• Consumers continue to vote with their feet: brokers now write more than 66.9 per cent of all new residential home loans, a number that has grown strongly over the past two years
• Customer complaints remain incredibly low: Data for FY21 shows complaints about mortgage brokers comprise just 0.39 of one per cent of all banking and finance complaints progressed by the Australian Financial Complaints Authority
• Broker loans are sound: Differences in arrears between the broker channel and branch channel are negligible, with some lenders seeing lower arrears from the broker channel
• Customers recommend their broker: Brokers had a Net Promoter Score (NPS) of 77 in 2021, an increase of 7 points over 2018 (“Big Four” banks tend to score between -7 and 16)
• Mortgage brokers drive competition: In the three months to December 2021, 46.5 per cent of AFG broker business went to a lender other than one of the “Big Four” and their associated brands.
• Brokers are systemically important to the effective functioning of the lending market: Brokers provide a vital distribution channel for lenders without branch networks.
“The recognition provided today, and the recent affirmation from the federal Opposition that there is no need to change the existing remuneration structure, show that both parties are aware of the vital importance of the viability of the thousands of small business operators working as mortgage brokers drive a competitive lending market and deliver choice and convenience for Australian consumers.”