Productivity Commission’s Errors a Tragedy for Home Loan Borrowers.

I nearly choked on my brekky this morning when I read this article, “Why you can’t get a good deal on your home loan” on

The article has a crack at mortgage brokers using the Australian Government Productivity Commission (AGPC) report into the finance industry released today.  It’s a tragedy for home loan borrowers that AGPC has got critical issues so wrong.

Mortgage Brokers are Licensed

This line really got my hackles up – “Unlike in wealth management, mortgage brokers are not obliged by law to act in the best interests of the customer,”

This is just plain wrong. Mortgage Brokers are licensed by the Government through ASIC and one of the requirements of our license is that brokers “must complete an assessment as to whether a loan is ‘not unsuitable’ for a consumer”. The compliance is very strict.

Furthermore, I would happily line up the performance of mortgage brokers against the wealth management industry.  For 16 years we have provided quality advice to our clients always putting them first.

Banks Taking Advantage of Loyal Customers

I do agree with the statement that banks offer a better deal for new customers rather than established. I’ve been commenting on that for over a year now.  However, the report somehow puts the blame for this on mortgage brokers not doing their job.

The reality is that the clear majority of customers who switch banks do so through a mortgage broker arranging a home loan for them with another lender.

Instead of deriding brokers the AGPC should be encouraging more consumers to talk to a broker.

Why Criticise Choice? 

The report claims there are 4000 different home loans and that somehow this is a bad thing.  Home loan choice combined with professional mortgage broker advice is absolutely the best option for borrowers.

Don’t Forget the Non-Bank Sector 

The article also does not mention the “non-bank lending” sector. We have always been a strong advocate for non-banks. They play a key role in innovation and providing solutions for niche markets that would normally be unable to obtain finance.  Mortgage brokers are the main way borrowers find out about non-bank lenders because they don’t have the marketing spending power of the major banks nor a branch network.

Word of Mouth Speaks Volumes 

Like most brokers, we rely heavily on “word of mouth” referrals so it is in our best interests to deliver the very best outcome for our valued clients and if we don’t they are less likely to refer.  Furthermore creating a win, win environment is what makes the world go around. The commission system used to remunerate brokers only rewards us when we get the job done for the client and for making sure they are happy over the long term.

It’s a Tragedy

I’m surprised and disappointed that Australian Government Productivity Commission, an institution we rely on for knowledgeable advice, could get this so wrong.  If the Government acts on these views, its only going to lead to tragic consequences for home owners and investors. It will also in fact decrease competition as borrower’s access to alternate lenders will be become more difficult.

The Mortgage & Finance Association of Australia (MFAA) is disappointed by the report saying “The Report’s authors have failed to understand the reasons why consumers engage brokers to act on their behalf“.

 I’d Love to Hear from You

As always if you would like to chat about how we might be able to assist you or if you would like to discuss the content of this article I’m always up for a chat, so please feel free to call me direct on 0409 02 99 22.


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