RESI, Wizard want brokers pulled into line
Mortgage brokers are getting out of control and are in danger of damaging the whole mortgage lending industry, according to Wizard Financial Services and RESI Mortgage Corporation.
The two non-bank lenders, both setting up their own broking operations, have jointly issued a list of ten ethical guidelines for the mortgage broking industry. Wizard chairman Mark Bouris claims that some brokers' behaviour is in danger of tainting the whole industry. The reputation of the entire lending industry will suffer if we don't do something to raise the bar, Mr Bouris said.
RESI's joint managing director Peter James said the mortgage broking industry is “getting out of control”, with some brokers opening up shop with no training or professional indemnity. The consumer is likely to be the big loser, he warned.
The joint guidelines have renamed mortgage brokers “lenders' agents”, which more accurately reflects their role, Mr Bouris said.
The guidelines call on lenders' agents to:
- Declare commissions upfront.
- Let the clients know if they are lenders as well as brokers.
- Undertake training and receive credentials form a reputable organisation.
- Have their own professional indemnity insurance.
- Provide clients with clear explanations of how they compared loans and arrived at recommendations.
- Inform clients about the make-up of their lending panels.
- Inform clients about what sort of ongoing service they will receive.
- Declare the AAPR of all recommended loans.
- Only refinance clients' loans when there are clear benefits.
- Declare all fees upfront: both their own and the lenders'.
The guidelines have been submitted to the Australian Securities and Investments Commission, Consumer Credit Legal Centre, and Fair Trading departments in all States and Territories.