The Finance Brokers Association of Australia (FBAA) has put lenders on notice to eliminate “clubs” that favour brokers based on volume before BID comes into effect.

FBAA managing director Peter White AM says lenders are still giving preferential treatment to brokers who write higher volumes despite the Combined Industry Forum (CIF) and legislation to be introduced ending volume based incentives.

“This disadvantages clients of other brokers and makes a mockery of the intent of this move.”

Mr White said some lenders are still prioritising business based on volume and taking far longer to start the process of the loan applications from brokers who don’t write enough for them.

“By way of a current example from a broker, without volume, it takes nearly an hour on hold for your call to be answered, and up to 30 working days for your application to be picked up. In some cases this is extending to over 40 days.”

He compared this to the one to eight days it takes to process an application submitted by a broker that is meeting a certain lender’s higher volume expectations.

“This unfair – and I might suggest immoral – behaviour is unacceptable”, he said, pointing out the irony of good quality borrowers being disadvantaged because their broker was acting responsibly and in their best interest.

“With the BID soon to be implemented, how can a broker claim to act in the best interests of a client with this sort of pressure from lenders?” he asked.

The association also warned that the industry would again come under increased scrutiny if these practices were allowed to continue.

“We all put a lot of effort into taking the steps necessary to end volume-based broker clubs, and we are better off for it, but the industry’s reputation will take another hit if brokers are again perceived to be favouring certain lenders based on anything other than what is best for the client.”