Using ASIC’s report on mortgage brokers as a springboard, consumer group Choice has waged yet another attack on the mortgage broking industry.
In an article that went live on its site hours after the research was posted, Choice CEO Alan Kirkland said, "We have a major competition problem in the home loan sector but the mortgage broking sector isn't fixing it – it's making it worse.
"Mortgage broking can and must be better. Australians, particularly younger, less experienced and less wealthy borrowers, are relying on mortgage brokers to get them a fair deal. They should be able to get advice they can trust," he added.
The piece warns potential borrowers to “understand the sales tactics” that they’ll “likely encounter” when engaging with a mortgage broker, and expresses hope that requiring brokers to act in the best interest of their customers will help drive “predatory sales practices” out of the industry.
The Finance Brokers Association of Australia (FBAA) managing director Peter White has “totally dismissed” Choice’s response, saying they have created “issues that simply don’t exist.”
“I thought Choice was meant to provide an independent and unbiased assessment, yet here they are again making extreme, unsubstantiated claims,” he added.
However, White clarified that while he has condemned the article, he welcomes the release of the ASIC report.
“I’m really pleased with the outcome of this ASIC research. Like any industry, we are always looking at how we can possibly improve,” he said, going on to voice support of the best interest duty.
However, White did express surprise over ASIC’s findings that 58% of those surveyed were only given one or two loan options by their broker.
“I believe most borrowers are given between four and six options. If brokers are only giving one or two, then that needs to be looked at,” he said.
“In reality, depending on the borrower’s circumstances, there may only be one or two options, so it would be wrong to make a generalised statement without knowing the details of those specific cases,” he added.
“But if we need to, let’s up our game as an industry.”
