Media Statements

In a submission to an Australian Treasury consultation paper on unfair trading practices protections for small businesses, the Finance Brokers Association of Australia (FBAA) said it wanted to “bring to the government’s attention the unfair trading practices being engaged in by lenders in Australia.”

FBAA CEO Leo Gagic said the broking sector is made up predominantly of small businesses, and that “a broker’s livelihood and ability to function is inextricably linked to credit providers.”

“When managed appropriately, the lender-broker-consumer relationship is a mutually beneficial one, and this is the relationship we are seeking,” he said.

The submission highlighted a range of undesirable practices including clawbacks, pointing out that clawback was intended to stop brokers from being paid for misconduct or non-compliance but has since evolved to clawback being triggered because of borrower conduct.

Mr Gagic said some lenders base clawback calculations around the notion of cost recovery which is unfair and inequitable.

The association also tackled net of offset provisions, calling the way these are being implemented in practice “shocking”, and declaring “slow payments of commission offend the general principles of fairness which are reflected in the expectations set by government under the Payment Times Reporting Act obligations.”

Channel conflict was also raised, with the FBAA submitting, “The desire to build direct channel is causing poor marketplace behaviour including incentivising internal staff to poach and refinance deals originally introduced by third parties, differential pricing whereby a lender will offer an additional rate discount to a customer originally introduced by a broker if the customer refinances through a branch (triggering clawback against the introducing broker in the process) and misrepresentation to customers about the cost of broker commissions increasing the rate they pay.”

The FBAA repeated previous concerns around lenders supporting “unqualified sources and offering payments to accountants, lawyers and others under ‘introducer’ or ‘referral’ arrangements,” pointing out that the Hayne royal commission examined defective introducer programs and found them to cause significant consumer harm.

“The separation of allowing unqualified people to introduce customers for a substantial fee free of clawbacks and other consequences is resulting in anti-competitive behaviours and unfair outcomes against regulated small credit licensee businesses.”

Concern was also expressed over lenders cancelling accreditation of brokers who don’t meet minimum requirements, calling it “repugnant behaviour” that was “more about consolidating direct business over third party channel than protecting consumers.”

Mr Gagic said it was time to end anti-competitive and unfair commercial practices.

The Finance Brokers Association of Australia (FBAA) has requested an urgent meeting with AUSTRAC to discuss the practical implications of the recent AML/CTF reforms and their potential impact on brokers and intermediaries.

CEO Leo Gagic said while brokers should not rush into making major changes at this stage, there is genuine concern around whether brokers are captured by the recent AML/CTF reform measures and any specific obligations that may apply to broker businesses.

“Our industry is keen to understand its compliance responsibilities and ensure we are appropriately preparing for any regulatory changes,” he said.

FBAA regulatory compliance specialist David Carson said the association requested information prior to the July 1 changes because “the way their guidance has been drafted would appear that commercial asset finance broking could be defined as a designated service which would bring it under AML/CTF rules.

“We are not convinced it was ever the legislative intent to capture this activity so we remain hopeful that we can obtain clarification that it is not captured.”

Mr Gagic said AUSTRAC needed to allay the “significant uncertainty and confusion across the broker community regarding whether these changes apply to our sector, and if so, explain the extent of the obligations that may arise.”

“We have contacted AUSTRAC again to seek definitive guidance on these matters, and we note that other industry associations have done so as well.”

He said the FBAA was committed to supporting Australia’s AML/CTF framework and wants to work collaboratively with AUSTRAC.

“It is important for our industry to uphold best practices, for the sake of brokers and our customers.”

Mr Gagic said he hopes to be able to clarify the situation around the changes soon and will update members as soon as he can.

Re: SMSF legislative changes

“Brokers must accept that a new world has arrived in regard to SMSF residential lending.

Along with borrowers we must adjust, as this legislation along with changes to negative gearing and CGT have now been rushed through parliament with no industry consultation.

The FBAA warned against these changes and while we hope our predictions don’t come true, there is already confusion and distress. There is a strong likelihood that both homeowners and renters will incur losses and higher prices as a result of legislation that won’t help solve the housing crisis in any meaningful way.

Specialist lenders in this field are doing what they can to support brokers and borrowers through these changes. While all new residential lending and limited recourse borrowing arrangements are effectively dead from August 10, opportunities for SMFS commercial lending remain as well as residential refinancing opportunities where appropriate through the grandfathering provisions enacted. 

As always, finance and mortgage brokers will be at the forefront of helping borrowers through these changes, and my advice to brokers is to be proactive and contact affected clients. Impacted clients will rely on the trusted assistance and guidance offered by brokers more than ever before.”

Re: Interest rate announcement today

The following comments are attributed to Peter White AM, FBAA spokesperson.

“With interest rates expected to remain on hold today, borrowers should be proactive and not complacent. 

After multiple rate rises, it’s the perfect time for mortgage holders to pause and review their current situation.

Many Australians are unknowing victims of ‘rate creep’, where lenders raise rates for existing customers while offering discounted rates to new borrowers. This means you could be paying more in repayments than you should be.

It’s a competitive lending market and many borrowers are unaware they can approach their lender and ask for a rate reduction. If the lender won’t do this – and many will not as they assume you won’t leave – ask a mortgage broker to look at the market and assess your situation and the options available.

There are often better deals available, and brokers can access a wide range of lenders including non-bank lenders that don’t deal directly with consumers. It is also important to note that brokers are legally obliged to act in your best interests, whereas lenders are not and cannot as they sell products. As cost of living pressures mount, there may be savings available for borrowers who are proactive.”

Over recent months, the board has not only been conducting a search for a new CEO, but has been using this time of change to consider ways to increase our impact, build our industry to even greater heights, and provide even better support to our members.

While we celebrate what has been an amazing journey for the FBAA to date and will always hold to the values that have brought us this far, we believe that what is ahead must eclipse the successes of the past. This is even more important as we enter a dramatically different business environment shaped by ever-evolving technology.

This desire to embrace the new starts with our leaders, and it is with excitement that we announce two appointments that will help shape the future of our association.

New CEO appointed

After an extensive national search we are pleased to welcome Leo Gagic as the new CEO of the FBAA. Leo is a proven leader in the finance sector, with decades of experience working for Westpac, NAB, Liberty Financial, Telstra and most recently Access Mercantile Services, where as CEO he oversaw the transformation and international expansion of the company.

Leo holds a Bachelor of Business, Economics and Accounting and an MBA from Monash University, and has deep capability to lead large service-oriented organisations.

We look forward to working with Leo to lead the FBAA and our industry into greater levels of success and progress, with members’ needs as the key focus.

New chair appointed

We recognise that the direction, governance and vision of the FBAA starts with our board, and have appointed the Hon. Nick Sherry as a director, who will become the board chair.

A former federal minister for small business, assistant treasurer, and minister for superannuation and corporate law, and with a parliamentary career spanning 22 years, Nick brings a wealth of knowledge around the regulatory and political environment, as well as post-government leadership at board level across various financial services organisations.

Nick’s appointment will bring a new level of experience and authority to the FBAA.

Recognising Peter White AM

The FBAA is only in a position to look to new horizons due to the successes of the past, and we want to recognise and honour Peter White for his service to our association and the industry at large.

There are few in our industry who have been as passionate about our industry or have made such an impact as Peter, and his work has provided us with this opportunity to embark on the next stage of our journey and step into an environment of change and innovation.

Quotes from new chair and CEO

Nick Sherry – “I am honoured to be appointed to the FBAA board and look forward to working with the board, new CEO Leo Gagic, and the members across Australia.”

Leo Gagic – “I am thrilled to be joining FBAA as CEO, and look forward to working with members, partners, the board and the team to strengthen FBAA’s influence, increase member value and ensure it remains the leading voice for brokers across Australia.”

The Finance Brokers Association of Australia (FBAA) says the federal government may yet be forced to reverse course on its tax attack on investors if housing prices or rental costs surge, as predicted by many.

FBAA Interim CEO Peter White AM said that while he urged the government not to proceed with the overhaul of capital gains tax and negative gearing because it will hurt those it’s designed to help, time will tell if the government or critics are right.

“Our political leaders have ignored the warnings and broken a solid promise, so they clearly believe they are on the right track, and now we must wait and see,” he said.

However he noted that the legislation was still to get through the House and Senate.

“While we assume it will pass as is, there is a possibility that it will only pass with some amendments, so there is still an element of the unknown.”

Mr White warned that the government will face its greatest test if the changes backfire.

“It is not obvious at this time how a reduced supply of rental properties coupled with increasing demand due to factors including population growth can do anything except drive up rental prices for many who are already struggling.

“At the same time, the government seems to think that if more properties are available for purchase, suddenly more first home buyers can afford them, but this ignores the many other factors that lead to housing affordability.”

He also pointed out that it’s likely prices on newly built homes and apartments off the plan will rise as investor demand increases, and this would drag up prices across the entire housing market.”

“If the government is right and the outcome is positive we all celebrate, but if it’s wrong how quickly will it react?” Mr White asked.

“If these changes make lives worse, will the prime minister and treasurer immediately admit they got it wrong, take responsibility and correct it?

“I’d like to see them publicly commit to a course correction if needed, as this will allay the fear many people currently have, and help to rebuild trust that has been lost due to this severe, broken promise.”

Call for brokers to be proactive

Mr White also called on mortgage brokers to be proactive by contacting clients and urging them to seek professional taxation advice for their future investment decisions.

“While brokers can’t provide taxation advice unless professionally qualified to do so, we can initiate conversations and remind clients that once they have an investment strategy based on the new laws, we are there to assist them with the finance options that will help them achieve their goals.”

The Finance Brokers Association of Australia (FBAA) says research from others has backed up its recent warnings of two economic storm fronts, and that they may be about to clash, forcing thousands of Australians out of their homes and sending rental prices soaring.

FBAA interim CEO Peter White AM said today’s expected RBA interest rate rise, added to this month’s predicted federal government changes to capital gains tax and negative gearing, could be “a toxic mix of pain and devastation.”

“Surely driving investors out of the market while at the same time increasing interest rates can only result in increased mortgage repayments and higher rental prices,” he said.

“I’m not an economist but it’s not rocket science that this affects lower income earners more than anyone else.”

Mr White said the FBAA warned before the last interest rate hike of added cost of living pressures due to the Middle East conflict, and this has now been supported by recent research from Finder showing that nine per cent of mortgage holders – or 297,000 people – would default on their mortgage if there are one or two more interest rate hikes.

“This is consistent with the FBAA’s research since 2021 before rates started to rise,” he said, adding that “we urged the RBA to start increasing rates more gradually at that time but no one listened.”

The association last month also called on the Federal Government not to make changes to capital gains tax and negative gearing, saying at the time that “the only result of any move to disincentivise investors, including those who own multiple properties, will be to increase the cost of living for anyone who rents.”

Now research from SQM Research has added weight to their claim, predicting a 20 per cent increase in capital city rents if the changes proceeded.

“These tax changes won’t lead to any positive effect but will mean that someone renting with the aim of buying a home won’t be able to save a deposit as easily, while many who are renting because they are already doing it tough will struggle to meet the increased repayments,” he said.

Mr White said there is still time to reverse course.

“These are not economic factors beyond our control, but decisions that are directly leading to darker times for many, and I hope both the RBA and federal government can change course before it’s too late.”

The interim CEO of the Finance Brokers Association of Australia (FBAA) has asked banks to support innocent Hai Money brokers who have been caught up in the ongoing fraud investigations and stand to lose their businesses.

Peter White AM said the situation was “fluid and messy” and endorsed the crackdown on fraudulent activities, repeating his call for anyone found to have been involved to be banned and prosecuted.

“The industry has to go hard on those who are tarnishing our reputation, and there can be no compromise,” he said.

However he also said there were Hai Money brokers who have done nothing wrong and should be treated as innocent until proven guilty.

“The FBAA has received calls from brokers who haven’t even written their first loan, and have lost their accreditation, and others who are distressed that there has been a blanket decision against all Hai Money brokers.”

Mr White says the association has an obligation to stand up for members who deserve natural justice.

“Overall, this is not about brokers from any one company or demographic, but about those, wherever they are and whoever they work with, engaged in sophisticated criminal activity.

“We can’t tar everyone with the same brush, and we must shine a light in the darkness and support those who have done nothing wrong and are running legitimate, honest businesses.”

He said he understands the complexity and the difficult role lenders and aggregators have in working out who is involved in the fraud, and asked them to do their due diligence to ensure those not involved were supported.

The Finance Brokers Association of Australia (FBAA) has urged the Federal Government to dismiss reports they are considering targeting property investors through changes to the capital gains tax discount and negative gearing.

The association says the proposed changes, reportedly to combat “intergenerational inequity” by forcing more investors out of the market and making housing more affordable for younger Australians, will have the opposite effect.

FBAA interim CEO Peter White AM said less rental properties can only drive up rental prices which have already risen significantly across Australia over recent years.

“While I commend the government for wanting to open up more housing, these changes will disadvantage the very people it seeks to help – younger Australians, as well as many other people on lower incomes.

“The theory that this will drive down the cost of housing to the extent where someone who can’t currently afford to service a mortgage and enter the property market, will suddenly be able to, is overly simplistic and ignores the many other factors in loan approval,” he said.

The FBAA’s 2023 ‘Australian mortgage and rental affordability survey’ conducted by research firm McCrindle found that even before today’s higher rental rates, those renting had to take on additional work, cut back on groceries and sell assets to afford the increased rental prices at the time.

It also found more than half of those renting had experienced higher stress, with others feeling socially disconnected and reporting increased family tension.

The association believes the only result of any move to disincentivise investors, including those who own multiple properties, will be to increase the cost of living for anyone who rents.

“Someone renting with the aim of buying a home won’t be able to save a deposit as easily, while many who are renting because they are already doing it tough will struggle to meet the increased repayments,” Mr White said.

He also pointed to the current shortage of rental properties.

“In many parts of Australia, there are 10 to 20 people or more looking at one rental property such is the lack of availability now, so why would we reduce that supply even more?”

The Finance Brokers Association of Australia (FBAA) says the current discussions around fraudulent mortgage applications should be approached from a position of integrity and perspective, ensuring that finance and mortgage brokers are held to the highest standards while the industry is not made a scapegoat.

FBAA interim CEO Peter White AM committed to support any initiative that mitigates risks of fraud and ensures that any broker who is found to have engaged in fraudulent practices is prosecuted.

He said the FBAA will do whatever it takes to be a part of the wider solution.

“Our industry is not immune to bad actors, but equally we must not accept any attempt to tarnish the overall reputation of brokers who are overwhelmingly of excellent character and go above and beyond to serve our clients and support lenders with integrity.”

Mr White said it appears that a key factor in suspected fraudulent activity was the involvement of organised criminal enterprises, which requires the focus of law enforcement and regulators.

“More information and data is needed to get the facts, and when this becomes available we will consider anything we can do as an industry body to play our part.”

However he said lenders must also be held accountable, and it was time for banks to finally re-evaluate some of their own practices including referral programs.

“The FBAA has been calling out some banks for ignoring recommendations from the Sedgwick report and the Hayne royal commission for many years, sadly to no avail.

“It is accepted that referral and introducer programs can be misused, and now they should be eliminated.”

Mr White also pointed to other bank practices and questioned how bank branches can approve applications previously rejected by brokers, “which we know happens.”

He supported calls for an industry-wide approach but said it must include all sectors.

“The finance broking sector has proven that we are prepared to work in the interests of the industry as a whole, even when it may adversely affect us.

“If others are also willing to make the tough decisions – and time will tell – we can combat the problem together.”