Islamic finance provider Hejaz Financial Services has announced it is abolishing all clawbacks on Hejaz home lending products effective immediately.
The announcement coincides with Hejaz recruiting its 1,000th accredited mortgage broker to its network, which the company considers an important milestone as it strives to make Sharia-compliant home loans accessible to Australian Muslims.
Its total funds under management currently stand at $280 million and as a dedicated Islamic finance provider, Hejaz’s mission is to offer products and services that are of a high ethical standard.
“Our brokers are our most important asset,” said Hejaz chief operating officer Muzzammil Dhedhy (pictured above). “By enabling our products to reach customers, they are helping Australian Muslims achieve the Australian dream of home ownership without compromising their values.
“We have put an emphasis on recruiting and training intermediaries because this customer base is growing and brokers should be equipped with the knowledge to best serve their clients’ interests. We believe there is no substitute for the hard work they can provide to clients, so we have taken this industry-leading step to show them we have their backs.”
Dhedy said Hejaz had long believed that mortgage brokers should be rewarded for the considerable time, effort and energy they put into sourcing clients and writing loans. He said the notion that a lender could claw back commission if a loan terminates within a period of time was unethical.
“Brokers are having to contend with a turbulent legislative landscape while at the same time suffering the increased cost of living, interest rate rises and broader economic volatility that all Australians face,” he said.
“Industry criticism of clawbacks has been mounting for some time but in this environment, we believe it is particularly unjustified for brokers to be penalised if a home loan is terminated due to an unforeseen client life event.”
Dhedy said Islamic finance was, at its heart, about transparency, ethics and fairness.
“We have long believed that clawbacks are unethical and so we have abolished them because we want to apply our principles not just to our products but to the way we work and conduct ourselves,” he said.
“By removing clawbacks, Hejaz is clearly recognising that brokers do the work and if they carry out their obligations under BID, then they should be rewarded, not penalised. As this matter has become more topical in recent times, we expect to see an industry-wide shift in mindset towards clawbacks.”
Read next: Hejaz seeking to become first Islamic bank
Dhedy said the significant market share that brokers now controlled, relative to direct lending, meant that due consideration must be given for brokers and their commercial position.
In March 2021, Hejaz became the first Islamic finance provider listed on aggregation platform Finsure.
Finsure CEO Simon Bednar said he was highly supportive of Hejaz’s announcement.
“Finsure applauds the recent announcement by Hejaz Financial Services to abolish clawbacks,” Bednar said. “Finsure has always stated that clawbacks are at odds with BID regulations which require finance brokers to act in the best interests of their customers and are no longer relevant for the industry.”
