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re-accreditation fees
“Yes, it will cost more in terms of resources and these will create additional cost to the aggregators,” he says, adding that while retail aggregators will more than likely not pass these costs on, those operating on low-margin models will pass them on. His point is echoed by Lawfund’s national aggregation services manager Michael Keating who says: “The re-accreditation process in many instances is not workable because it takes too long to do and costs too much money. In the time it takes for a lender to process the administration involved in re-accreditation, it can take so long that the product could be pulled and the broker loses out on all fronts.” While Keating says Lawfund understands why the lenders are doing it, he adds: “it creates huge problems for a broker when they are not able to offer a product which might suit the client
“ Brokers shouldn’t be penalised for not submitting loans. This policy forces brokers to restrict their lending panel ” –Kym Rampal, Loankit better. It is the lenders, of course, who also miss out in this situation. “Our concern is that these proposed initiatives promote the practice of brokers working within a smaller sub-set of lenders which is against the broking proposition,” says Kolenda. “We think that the lenders will have to look closely at how these activities influence lender selection.” Mortgage brokers are supposed to provide borrowers with choice, but will re-accreditation fees limit the choice they give consumers? Under the National Consumer Credit Protection Bill brokers have an obligation of disclosure. Credit service providers must supply potential borrowers with a credit guide that includes a panel of credit providers and the commissions the credit service provider gets. Should brokers disclose to consumers that they have an obligation to file a prescribed number of loans to certain lenders in order to maintain their accreditation?
“We strongly object to this as it impacts the whole broker proposition,” said AFG’s executive director Kevin Matthews. “It forces a broker to concentrate their activities on two to three lenders rather than focusing on what is best for the customer. It is also our belief that if a member of ours is doing all the right things to maintain their AFG membership, then they should have the right to deal with the lenders AFG has contracts with.” Loankit’s managing director Kym Rampal says the issue of re-accreditation fees does not directly affect aggregators. “Brokers shouldn’t be penalised for not submitting loans. This policy forces brokers to restrict their lending panel,” he says. “When lenders claim that this is to restrict their best products to only the most ‘professional’ brokers, they are confusing professionalism with a bias towards their own products.” But not all aggregators see problems in banks charging a re-accreditation fee. Finconnect general manager Tanya Sale says its brokers will not be adversely affected: “If our members decide not to get themselves re-accredited, they can refer loans to our lending managers who can write the lending transaction on their behalf.” And according to LJ Hooker’s general manager Peter Bromley, the re-accreditation fees will force aggregators “to place more emphasis on training on product knowledge to help improve the service that brokers provide to limit these fees being implemented.” He also believes sending business to the majors is better for consumers: “Implementing these policies will create a greater alliance within the industry and again drive business through to the major banks as brokers try to find avenues to not pay re-accreditation fees. This would see more brokers using the major banks as they can offer more products and options.” Mortgage Choice CEO Michael Russell also puts a positive spin on the re-accreditation fees saying they will “sharpen up the performance of many through necessity.” PLAN CEO Ray Hair believes the fees could be a positive for top brokers. By introducing volume requirements, banks would be able to concentrate on brokers who are more familiar with their products. This would benefit top brokers whose quality metrics are currently being affected by member brokers with poor performance records, Hair says. MPA
John Kolenda
Kym Rampal
Michael Russell
brokernews.com.au
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