The Finance Brokers Association of Australia (FBAA) has expressed significant concerns regarding attempts by some banks to hinder mortgage brokers from using automated rate tracking and repricing tools on their back books.
These tools are crucial for ensuring existing customers benefit from lower rates, the FBAA said.
Peter White (pictured), FBAA managing director, highlighted that certain banks are warning brokers against the use of these tracking systems, threatening de-accreditation under the guise of privacy concerns.
Rate tracking tools like Sherlok and Quickli automate loan monitoring and repricing, helping mortgage brokers maintain competitive and current offerings in a dynamic market.
“They appear to be claiming it is a privacy issue, and while this may be legitimate in some cases, I don’t accept this is the entire reason or even the reason at all in some cases,” White said.
He further criticised the banks’ actions as potentially profit-driven at the expense of consumers.
“If banks are using this as another way to increase profits, it would be quite unconscionable as it means customers are being intentionally disadvantaged,” White said.
A 2023 Compare the Market study found that nearly half of Australian homeowners could be overpaying due to higher back-book rates, as they haven’t refinanced. This benefits lenders, who often charge existing clients about 1.99% more than new customers, effectively imposing a “loyalty tax” on those who do not seek out better offers.
White argued that prohibiting automated tools not only hampers brokers’ ability to operate in their clients’ best interests but also facilitates “rate creep”—a situation where banks slowly increase rates for existing clients while enticing new customers with better offers.
“Any attempt to outlaw automated rate tracking and repricing systems prevents mortgage brokers from properly servicing their customers,” he said.
The FBAA, which recently exposed the dual challenges faced by mortgage brokers due to clawback policies, believes that embracing technology and conducting regular back book reviews is essential. This transparency ensures that clients are not unfairly charged higher rates over time.
“Lenders must understand that doing the right thing generates customers for life,” White said, indicating that ongoing client management and rate reviews could deter customers from seeking refinancing options.
White slammed the banks’ tendency to offer better rates only when they face the risk of a customer refinancing.
“Time and time again we see banks offering better rates only when the customer is considering, or starts the process of, refinancing.”
The FBAA urged banks to support brokers in employing the most effective tools for rate reviews to benefit consumers fully.
“I’d urge banks to instead encourage back book reviews by whatever way is best for borrowers and the most professionally proficient for the broker, and maybe the customer won’t need to consider refinancing,” White said.
This approach, he believes, would foster a fairer banking environment where long-term customer loyalty is valued over short-term gains.
