Long Division
It’s already a tight squeeze in the financial services market by way of number of players competing for each and every consumer dollar.
In the mortgage market in particular, the sheer diversity of business models can be a source of much confusion to the average, everyday prospective borrower.
There’s your aggregators, your mortgage originators, your banks and non-bank lenders, your conforming, your non-conforming… the jargon alone can be enough to deter anyone from entering the property market.
Consumers, by default, need someone to act on their behalf – beyond the scope of a mortgage broker, in representing their needs, concerns and questions in taking out a loan.
Similarly, the operators need to have it seen to that everyone is functioning on an even playing field, and the so-called rogue operators are sufficiently brought into line.
The obvious way to oversee this is by way of an industry body – a party purely established for the benefit of serving members and representing the needs of the consumer – if only it were that simple.
In mortgage-land, there are two associations satisfying this space – the Mortgage and Finance Association of Australia (MFAA, formerly the Mortgage Industry Association of Australia or MIAA) and the Finance Brokers Association of Australia (FBAA).
With national regulation of the mortgage industry pending, the time is now to truly assess the role of industry bodies and whether there is in fact room for two.
Do they offer the same services to members? Who is regarded more highly in the eyes of consumers? Should they amalgamate?
A recent stoush between the two groups highlighted an apparent division set by parts of the industry, following a submission by the FBAA made to the Australian Competition and Consumer Commission (ACCC) that certain lenders are accepting membership of the MFAA only.
Are you member to a financial services industry body? How do you rate the benefits, and should there be one body representing each financial services market?
David says:
You can’t compare the FBAA and the MFAA – they aren’t even trying to do the same thing – the MFAA is well resourced useful and is interested in helping the industry – the FBAA – its seems is set up to make its principle relevant. By rights anyone who belongs to the FBAA gets what they pay for, which is nothing.
Troy says:
One industry body cannot represent the interests of lenders AND brokers. They are, at times, directly opposed. Yet when it comes to funding, the industry groups look to lenders. When it comes to the make-up at executive level, once again there is heavy weighting towards the lenders. And the obligatory membership with the MIOS if you are a member of the MFAA is comparable to compulsory unionism. So the lenders as a group, really run the MFAA and have an unfair weighting about how the industry operates. This means anti-competitive behaviour via lender collusion is the result (with myths such as broker initiated churning, and the other classic “margin squeeze”). The MFAA enjoys a healthy representation more so than the FBAA, possibly as a result of sound marketing, a greater budget and lack of thought by most in the industry. But they are in reality a tool of the lenders to govern the industry at arms length.
Steve says:
I am a member of the FBAA who are the true representaives of brokers. When I worked for a Lender I was a member of the MFAA. My experience is the MFAA represents the interests Landers and Agregatrors and not the brokers.