Mortgage brokers are this week fighting back against the Hayne royal commission criticism claiming they are a moderating influence on the lending sector and the dominance of major players.
The Mortgage and Finance Association of Australia has released a report for ASIC and the Federal Government that shows brokers are generating fewer complaints than ever.
MFAA CEO Mike Felton has written to members denying the industry is full of cowboys and says the data proves it.
“Complaints and arrears would be high, competition and consumer support would be shrinking and prices would inevitably begin to rise,” he wrote.
“Is that the case? Absolutely not.”
The MFAA, using proprietary information, says figures show mortgage broker loans doubling since 2008 while at the same time complaints to the organisation have fallen by 78 per cent.
The MFAA also adds that complaints about brokers to the Credit and Investment Ombudsman only made up 6 per cent of their complaints despite accounting for over 90 per cent of their membership base.
Mr Felton also says there are few problems with the quality of loans signed by brokers, with data showing only a very small uplift in arrears data across the seven major lenders of broker loans.
“We believe recent criticisms are a clear reflection of the pressure being felt by the entire financial services sector to drive revenue and margins – and to respond to the royal commission,” he said.
“The decimation of the broker channel would be very good for the profitability of some traditional lenders who want to return to branch-based lending.”
The Productivity Commission is expected to make a recommendation on what the future of remuneration for brokers should look like when it releases its competition in the banking sector review final draft in the coming weeks.