Only around 6% of complaints sent to the Credit & Investments Ombudsman (CIO) relate to brokers and aggregators with disputes much more likely to stem from residential lenders.
“Funnily enough, we don’t get huge amounts of broker complaints. In respect to statistics, it’s probably on a much lesser end,” said Danielle Gewerc, CIO senior manager of dispute resolution, during a mortgage broker Q&A session at the CIO’s Dispute Resolution Conference 2017 in Sydney on Tuesday (12 September).
In comparison, 46% of CIO complaints are about residential lenders, she said.
The majority of broker complaints are for failure to act with due care and skill, inappropriate finance, misrepresentation and misleading misconduct, and other issues.
“We don’t get a lot of broker complaints. That’s a good thing [if you’re a broker] or are working in that sphere, dealing with any disgruntled consumers really early on. That’s really good to see,” Gewerc said.
Inappropriate finance is the biggest misstep by brokers, she added, especially around the failure to sufficiently examine a client’s living expenses.
CIO credit analyst Jazz Nevill said there were five ways for brokers to avoid being at the receiving end of customer complaints in these types of disputes:
- Keep clear notes on all customer interactions
- Create a realistic exit strategy for the client
- Calculate IO loan repayments on the residual P&I term
- Use living expense benchmarks properly
- Be aware of customers making multiple lodgements
“I have no doubt [brokers] are having the conversations but it’s the recording of those [that’s an issue]. We have to be a fact-based investigation and it’s very hard when you get into ‘he said, she said’ sorts of situations,” Nevill said.
“My biggest takeaway tip for you as brokers would be to make sure these things are documented and noted so you’ve got something to point to… Protect yourselves in that point of view because it will make it a lot easier to address specific concerns if we have that documentary evidence.”
This applies across the board, he added, including with aspects such as living expense enquiries, exit strategies and objective of purpose.
If the dispute resolution process does find in favour of the consumer, the broker can be asked to provide restitution for any financial damages sustained – ie if the client loses a deposit because they received inaccurate information from the broker. The CIO may also require recompense for non-monetary losses up to a maximum of $3,000.
Being a documents-based scheme, the CIO was fair and impartial when deciding whether the broker or consumer is at fault in a dispute, Gewerc said.
“If you look at the statistics, we actually make more findings against a consumer than for. [Because] the credit provider might see early on that they have actually done wrong, they will often come to the party early because they have those responsible lending obligations.”
“We are only a documents-based scheme so if hypothetically a consumer makes an application to complain against a credit provider but does not have any documentation to support his or her claim, it is going to make it very, very difficult for us to make a finding later on.”
If the broker cannot locate files relating to a particular client complaint, Gewerc said that the CIO may lodge an adverse finding against the broker, especially if they cannot prove that they have not done whatever the consumer claims they did. The CIO may also make a finding that they do not have sufficient information for the case.
Nevill urged brokers to take more detailed file notes when dealing with clients.
“I see precious little of that and if I can see that those concerns have been addressed, that will work a lot more in your favour.”
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