Media Statements

The Finance Brokers Association of Australia (FBAA) has urged borrowers to think twice about their next move after benefiting from the second consecutive month of interest rate cuts by the Reserve Bank.

FBAA managing director Peter White welcomed the rate cut but urged consumers not to spend all their windfall. “The Reserve Bank has admitted to concerns about the weakening jobs market and economic growth as well as risks to the global economy. These all point to the need for a cautionary approach.

“The banks need to pass this rate cut on in full and I would urge borrowers to pay some of their debt down by maintaining their repayments at the levels before the June rate cut.

“I understand the need for consumer spending to boost the economy but I also respect the need for Australians to increase their net wealth position and provide some safeguards in an economy which still has some downside.”

The Finance Brokers Association of Australia (FBAA) has demanded that banks walk away from a new requirement that brokers sign a declaration stating they are unaware of borrowers suffering financial abuse, and have advised brokers not to sign any such declaration.

FBAA managing director Peter White says while the association supports moves to prevent people being coerced into a loan, this is a knee-jerk reaction from the banks that requires far more legal and industry consultation.

Noting that the proposed wording hasn’t even been widely released, he said, “To try and ram this through with little notice is not only ridiculous and ill-conceived, but creates massive risks for brokers with almost no benefit to borrowers.”

Mr White said brokers are not psychologists and the suggestion that they can somehow predict if someone is being wrongly influenced to apply for a loan is foolish.

He also believes brokers would be exposed to legal action both from banks and borrowers, and revealed that professional indemnity (PI) advisers have told him that this declaration would not be covered under existing PI terms for brokers.

“My initial information is that PI insurance could increase tenfold to cover a declaration like this. There are so many issues that have not been considered, and banks must put this aside until these have all been addressed.”

He also said that emotional abuse of any kind is a complex subject, and being able to recognise in-depth signs when discussing a mortgage puts far too much pressure on brokers.

“It’s absurd to even suggest that finance and mortgage brokers can do a two-hour or two-day course and suddenly be able to analyse people to the point where they can declare there is no financial abuse taking place.

“The banks are attempting to bring a simple solution to what is a serious and complex issue, and I have to question whether this is more about protecting themselves than the public.”

Some of Australia’s most talented and successful finance practitioners are about to engage in a series of events aimed at helping brokers broaden their business approach to provide additional income opportunities.

The 2019 Commercial Industry Masterclass will reveal the full potential of a $25 billion segment of the lending industry to brokers, many of whom have not expanded their businesses beyond home loan lending.

Pepper Money head of commercial Malcolm Withers said there are many opportunities for brokers to build their business, and the masterclass, which also offers five CPD hours, will show them how.

“The royal commission and the resulting political debate saw many brokers reconsider whether they had a future, and the upheaval would have deterred some from entering the industry.

“Brokers need to refocus on building their businesses, and commercial and equipment lending is one way they can do that.”

Mr Withers, previously the head of commercial broking for St George Bank for nine years, said this area was underserviced by brokers.

“Whether you are a long-term broker or just new in the market there are wonderful opportunities to satisfy the commercial lending needs of clients. It’s important for brokers to find the best lending solution for their commercial client, and they should be aware that there are options outside the big banks.”

The 2019 Industry Commercial Masterclass is a five-hour course, open to all industry professionals, which will reveal how brokers can succeed in the commercial and equipment finance product space.

“Our presenters include some of the best operators in commercial and equipment finance and they will provide critical advice to help brokers operate effectively in this sector.”

Glenn Mitchell, head of Vow commercial & leasing has worked at commercial lending institutions and within the aggregator broker space for over 30 years.

“If you have ever considered or would like to understand more about the key indicators for commercial lending, this a must-attend training session,” Mr Mitchell said.

The day will provide information on financials and quality submissions as well as templates for commercial lending.

The series starts on June 18 in Adelaide, followed by Perth on June 19, Brisbane June 25, Melbourne June 26 and Sydney June 27.

For bookings visit:  https://www.fbaa.com.au/events/

The Finance Brokers Association of Australia (FBAA) has urged borrowers to keep their repayments at current levels despite the Reserve Bank of Australia’s move to cut rates by 25 basis points.

FBAA managing director Peter White has welcomed the first cut in nearly three years and called on the big banks to do the right thing and immediately pass it on rather than boosting their profit margins.

“If the banks refuse to pass this on in full they will reveal they have learnt nothing from the royal commission process,” Mr White said.

However, with economic challenges on the radar Mr White is urging beneficiaries of the rate cut to keep their repayments at current levels to drive down debt.

“Borrowers will effectively be saving for a rainy day if they keep their mortgage repayments as high as they can afford. It’s better to have payments in reserve if conditions deteriorate further.”

Mr White agreed with some economists that there had been some recent positive sentiment, certainly in the housing market but he acknowledged the Reserve Bank has limited capacity to stimulate the economy further with the official rate at 1.25 per cent.

“I understand why the Reserve Bank governor Philip Lowe has called for governments to play their part in stimulating the economy but I also see some positives.

“It’s not the time to panic but it is definitely time for prudence,” Mr White said.

The Finance Brokers Association of Australia (FBAA) has welcomed the appointment of Senator Jane Hume as financial services minister while thanking outgoing minister Stuart Robert for his courtesy, professionalism and commitment to the industry.

FBAA managing director Peter White said he was looking forward to working with the new minister.

“I congratulate the senator for her appointment to the ministry. I am pleased to note that the senator has qualifications in the financial services sector and commerce and has experience in management roles and in directorship positions.

“I will be looking for an early opportunity to meet with Senator Hume to ensure the momentum gained through meetings with Stuart Robert and treasurer John Frydenberg continues.

“We have much work to do to ensure the broking industry continues to provide the competition in the sector that all Australians demand.”

Mr White also congratulated the treasurer for retaining his role. “The FBAA has worked with Mr Frydenberg for many years, initially as financial services minister, then treasurer and we will remain in contact with the offices of both Senator Hume and the treasurer to provide regular feedback from our industry.”

The Finance Brokers Association of Australia (FBAA) has welcomed moves by the Australian Prudential Regulation Authority (APRA) to loosen its deemed serviceability requirements that have resulted in banks rejecting many reasonable loan applications.

FBAA managing director Peter White said times have changed significantly since APRA introduced guidance to authorised deposit-taking institutions (ADIs) to test residential home borrowers against an interest rate of 7.25 per cent, or well above a 2 per cent buffer over the loan’s actual interest rate.

APRA provided its guidance towards the end of 2014 when house prices were increasing and there was strong growth in investor loans.

“The end result was most banks were assessing applications against a rate of 7.25 per cent – way above the interest rate for owner-occupiers and investors.”

On Tuesday the prudential regulator gave the industry four weeks to respond to its proposal to remove the 7.25 per cent requirement, allow ADIs to determine their own floor rate levels while increasing the rate buffer from 2 to 2.5 per cent “to maintain prudence in overall serviceability assessments.”

“Brokers have a duty of care to always assess an individual’s capacity to afford the loan they want as part of our commitment to put customers first. But if the guidance is introduced it simply allows us to help more borrowers into properties that they can afford at a time of low interest rates and subdued house prices.

“When you combine the touted change in APRA guidance with the end of the election cycle and the possibility of the Reserve Bank cutting interest rates in June, there are some positive signs for our housing sector in the months ahead,” Mr White said.

“Just eight weeks ago I supported ASIC and APRA in their criticism of the big banks for blaming tough new interpretations of responsible lending regulations and the royal commission for the credit squeeze and delays in assessing loan applications.

“I will be watching the banks with interest to see who they blame next for their shortfalls after the new APRA guidance is issued.”

The Finance Brokers Association of Australia (FBAA) has congratulated Scott Morrison and the Coalition for their election win and vowed to work with them to ensure borrowers continue to have choice in a healthy financial services industry.

FBAA managing director Peter White said now is the time for brokers to take the handbrake off and hit the accelerator.

“The royal commission findings and the political fallout saw many brokers retreat into a holding pattern, driven by fear about their very financial survival and what that would mean for borrowers.

“Now that the election is over, I want to urge all brokers to commit to doing everything we can to grow our businesses now that banks know we are a force to be reckoned with.

“We currently provide around 60 per cent of home loans and I think brokers have a great opportunity to increase that to 70 per cent in the short to medium term.”

Mr White said the FBAA had worked closely with both the Government and Opposition in the lead-up to the election and had positive and professional support from both.

“On Sunday I communicated with both Labor and the Coalition, conveying thanks and best wishes from all brokers.

“We will continue to be highly engaged with politicians from across the country because our industry is a crucial one as we move into a new era.

“Brokers welcome the first home loan deposit scheme and other policies aimed at giving the property sector a boost. We will certainly do our part to boost competition and be ready to assist when the policy comes into play in January next year.”

The peak body representing Australia’s finance brokers says the Government’s proposed loan guarantee for home buyers, which will allow them to enter the market with only a five per cent deposit, is a very good initiative.

However managing director of the Finance Brokers Association of Australia Peter White said the scheme’s success will be dependant on the banks which have over tightened credit policies following the royal commission.

“This will be great for first home buyers, although it’s worth noting that only about one tenth of the market will gain access to it,” he said.

While saving borrowers thousands of dollars in lenders mortgage insurance is a good outcome, Mr White cautioned that greater detail is needed to truly assess the benefits.

“There is a very good fundamental reason to have a deposit. If you can save for a deposit you can meet your monthly repayments, and this is what the banks look at.”

He also pointed out that with a falling property market, negative equity is a risk.

“We need to know the lenders’ credit policies around this, and they will have to step up to the mark and support it.”

However he said overall, “if it can help stimulate people into buying their own home then that’s great.”

The Finance Brokers Association of Australia (FBAA) says many would-be home buyers will be disappointed by the decision of the Reserve Bank of Australia (RBA) to keep interest rates on hold.

FBAA managing director Peter White said the RBA board referenced employment figures strongly in their statement on monetary policy but also noted the impact of the changing dynamic on the housing market.

“The RBA has admitted that the demand for credit by investors has slowed noticeably as has growth in credit for owner-occupiers.

“Housing does play a major role in the health of the economy and while I understand inflationary pressure is subdued in part because of lower housing costs, we need a healthy and resilient housing market and we need accessible and affordable credit to achieve that.”

Mr White agreed with the RBA that borrowers of high credit quality can benefit from the current low mortgage rates, however that might not help first-home buyers or would be investors with limited credit history.

“As an industry, brokers are a saviour for many borrowers and I think the key role of brokers has been acknowledged by both sides of politics in the current election climate.

“I would have liked to have seen a rate cut but I firmly believe a reduction is still on the agenda in the coming months. What is also needed is certainty for brokers to ensure that we can continue to provide competition to the big four banks.

“We would like a commitment from both sides of politics to ensure the survival of the mortgage broking industry so that all Australians can continue to benefit from the services of a finance broker. We need the right policies to achieve that, not more uncertainty and deferred decisions.”

The International Mortgage Brokers Federation (IMBF) has elected Peter White, the managing director of the Finance Brokers Association of Australia (FBAA), as its inaugural chair of their board of governors.

Mr White continues in his role as the association’s managing director and has been part of the FBAA for 16 years holding positions including national vice president, national president, chairman of the board of directors and chief executive officer.

“I am honoured to be elected to this position with the IMBF which uniquely leads the broking industry in global co-operation and collaboration. At no time in our industry’s history has this been done.”

Mr White played a significant part in the birth of the federation which was launched in Canada late last year. A foundation meeting last month established the board of governors and elected office holders.

“The purpose of the IMBF is to lead industry associations around the world in collaboration so they can openly discuss their own journeys with regulation and how they may impact regulation in our own countries.

“The IMBF has already proven its worth in the FBAA response to the banking royal commission. The commission was told by a major bank that the Netherlands broker model should be implemented here.

“Our colleagues in the Netherlands quickly explained the failures of that model and our resulting submission saw both sides of politics, and the commission itself, reject the idea.”

“As well as broking topics the IMBF also discusses matters such as property markets, economies, regulations, global codes of conduct, rules of ethics, data research and best practice so that our members are informed like never before,” Mr White said.

The IMBF also established an international referral network allowing brokers to refer clients moving overseas (or those coming to Australia from overseas) to be looked after by leading professional brokers in the country they are moving to, in consultation with the client’s current local broker.

The board of governors include chief executive officers, managing directors and national presidents representing finance and mortgage broker industry associations from Australia, Canada, the UK and the USA. New Zealand, the Netherlands, and other countries from Europe and Asia are expected to join soon.