Selecting a mortgage broker
A few mortgage brokers in Australia have been behaving badly and the Australian Securities and Investments Commission (ASIC) isn’t happy about it, increasing efforts to stamp it out.
What sort of behaviour is being targeted? Misleading advertising is one. A number of brokers have recently been fined tens of thousands of dollars for making statements in their advertising that were deemed likely to mislead or deceive consumers.
Late last year, one of Australia’s largest broker franchise groups was hit with a $30,600 penalty following the airing of TV and online commercials that claimed the group had, on average, saved customers ‘$10,000 over five years’.
ASIC investigated the claim and found that no customer had actually saved $10,000 over five years (at the time of the advertisement being run). The figure was rather a projected saving based on calculations from a sample of around 300 refinancing customers over a six-month period. While the broker would save the clients’ money, it had not yet occurred to that extent.
In a serious example of bad behaviour, a few brokers have been singled out for submitting loan applications containing fraudulent documents. These renegades deliberately falsified documents to obtain loans, totalling hundreds of thousands of dollars, for themselves, clients and family members. Some of these brokers have rightly been criminally charged and convicted.
We welcome the moves to clamp down on dodgy behaviour and strengthen customer safeguards. Around half of all loans are done through a broker, so it’s extremely important to put protective measures in place.
As with any industry, there are always a few bad apples. Mortgage broking has around 10,000 people providing broking services, so there will be a few who don’t conform. Most brokers take great care and responsibility in their role and don’t step over the line.
Brokers have a far greater selection of products than going to a bank directly, so it makes sense to use one for your loan needs. When you do choose one, it pays to go with a reputable company that you can trust and a broker who understands your specific requirements.