MFAA aggregator/lender summit dubbed a farce

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Maria Rigoni, Australian Institute of Professional BrokersBy Jill Fraser for Lending Central

The MFAA’s upcoming round table discussion between aggregators and lenders, which has been called to address industry issues, has been declared a charade.

Citing a lack of broker representation at the meeting Australian Institute of Professional Brokers (AIPB) co-founder, Maria Rigoni maintains that aggregators are not independent enough to represent brokers.

Referring to next Tuesday’s summit as a “get together that makes it look like we’re doing something for brokers” Rigoni says yet again brokers are being excluded from a significant industry decision-making process.

The crisis in service to brokers and the subsequent departure of growing numbers of brokers from the industry will be one of the main items on the agenda but Rigoni’s request to be included was declined.

Rigoni told Lending Central that she sent an email to MFAA CEO Phil Naylor stating that the forum needs “broker presence”. Naylor responded that due to attendee constraints it was judged that aggregator/broker groups would best serve this purpose and present brokers’ issues to lenders.

“Quite clearly we couldn’t invite 13,000 members,” Naylor told Lending Central.

“We decided to focus on the key broker groups on the basis that they would get information from their members concerning issues they want raised with key lenders.”

Naylor is aware that a number of aggregators have invited brokers to offer suggested urgent matters that they want to see aired.

Loan Market Group director and chief operating officer, Dean Rushton supports the MFAA’s decision to channel the broker voice via aggregator/broker groups.

Dean Rushton, Loan Market GroupRushton says “aggregators will put through a consolidated view of the issues”.

Loan Market Group executive director, John Kolenda wrote to Naylor urging him to facilitate a meeting of the industry’s “Top Ten Aggregators and Lenders” to try and resolve what he described as an untenable situation.

Naylor states that a decision to hold the forum was taken by the MFAA board at a meeting held on 3 April, prior to his receipt of Kolenda’s letter.

Rigoni’s accusation is that “aggregators’ hands are tied”.

“If they really had the capacity to change the current situation they would have already done so,” she says.

“Aggregators are not independent enough to be representing the brokers.

Whilst I believe that some individual directors of aggregators would love to see the scale of justice tip in favour of brokers aggregators in the current environment simply cannot afford to upset lenders.

“Aggregators have commercial contracts with lenders therefore lenders have the capacity to really hurt them financially,” she says.

These commercial agreements curtail their impartiality and usually mean “they don’t walk their talk”, says Rigoni.

“Brokers need to wake up,” she declares. “They don’t need banks. They need borrowers. Banks have too much power in this country and they misuse it and brokers are in competition with banks for borrowers.”

(Lending Central’s request for a media pass to Tuesday’s meeting was declined.)

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19 COMMENTS

  1. How on earth does the AIPB think they can have any impact at all, or bring any pressure or influence to the table?
    Whathave they done so far?
    How can they help, except be another “membership fee” collector for zero effect?
    Why reinvent the wheel with another neutered, amateur organisation?
    I don’t think the MFAA represents brokers needs, and are too heavily influenced by lenders. I think the FBAA is an amateur hour organistaion, with no real pull or power.
    I don’t think the aggregators do enough to challenge the lenders, but they’re not in a position to do so either.
    Solutions, I don’t have them….
    But another organisation, that is reinventing the wheel, and has no base or broad support isn’t going to help. neither are opportunistic attacks like this, which are just designed for PR.

  2. Well put Maria “….Banks have too much power in this country and they misuse it and brokers are in competition with banks for borrowers.”

    St George took their time with one of our applications. They walked into a St George branch and were given an unconditional approval the same day. We had to go through the valuation process and the branch didn’t. The St george branch knew they had lodged an application with us and to entice them, they reduced the rate by 0.10%. Took this up with St George and got nowhere. I’m sure there are thousands of examples like this. Unfortunately they are too strong and I can’t see how we are going to change this unless the banks provide an agreement that we brokers will be treated equally. In the meantime, we have to put up with it and rely on our clients to maintain loyalty to us. I am sure in due course the banks will regret their actions when the non banks come back strongly.

  3. Frankly allowing the MFAA to represent us the brokers is like asking the fox to look after the eggs.

    The MFAA is in itself a farce. What a joke. It is nothing more than a BANKERS club.

    And so say most of us at the front line !!

  4. When are we all going to see that both the MFAA or the FBAA are just as useless as DOCEP and all other money milking organisations. I went to the MFAA forum in WA and was shocked to see it has a board of 12 of which most of them are Banks and/or aggregators. As a Broker-Loan Writer there is no representation whatsoever. We just have to stick with it and wait for the right competition to come up so we can be back in there. I just wish we could just refuse to pay any money to any of these useless organisations AND JUST GET RID OF THEM. They are just there to COLLECT and PRETEND to do something but they are ruled by the BANKS and AGGREGATORS. What a waist of time and money.

  5. I guess we need to lobby the regulators to understand that the MFAA and aggregators are not representing us – but how can we do that in a coordinated manner without a body to manage it. Jeff reckons the FBAA are amateurs but isn’t that what you will get and should expect if you have brokers representing brokers? They aren’t professional lobbyists they are brokers. I do agree however that the FBAA could lift its game and its profile – maybe this isn’t a job for their board – maybe an ‘action squad’ but it will only do that if dedicated and passionate brokers get on the wagon.

  6. Ladies and Gents This is just another example of how our industry has been totally manipulated by the lenders (and I include a large number of the mortgage originators in that) and the aggregators all getting in to bed together and denying you and I the brokers on the front line the ability to deal direct with the lenders. Aggregators convinced lenders that we need to do minimum volumes to deal direct with them or the management of the system becomes too onerous. Aggregators did this so that they could take fees from you and I and consequently the ownership of the loan book and thus push us down to the bottom of the tree. If you think you own your loan book then consider this. Your aggregator could find a reason to cut your commission ( something as simple as you upset one of the lenders staff and this isn’t in the interest of us as a group) and then you have nothing. Then again the directors of the aggregator could go and do a dud property deal and take your commission to pay off their creditors, yes this could happen. You do not own your trail commission, read your aggregation agreement. The aggregators are only representing themselves.
    This so called industry summit is nothing more than a meeting of the fat cats of our industry all sitting around laughing at you and I and saying aren’t we doing all right.
    As for the MFAA what is it they actually do ?

  7. Oh to be fly on the wall at this meeting, I guess our annual fee has to be spent somewhere and on something…………

  8. What harm would come from inviting Maria? Maybe they are afraid?

    While she may not represent all brokers in the industry, she does have a brokers best interest in mind it seems. While I don’t have all the facts, I don’t think that can be said of most of the lenders we deal with, the MFAA, or our aggregators unfortunately.

    I would think our aggregators would want to represent us fairly, but they are up against the fence with the lenders who support/sponsor them financially. This is the issue plain and simple. I would say this model with our aggregators needs to be addressed to eliminate the leverage the lenders have on them.

    It may as simple as I’d hate to say it, but each member of the aggregation group paying a couple hundred dollars a year. If they do their job, we may get this back in increased commissions and trails(or no further reductions in our commissions or trails) or services of some sort. I don’t want to pay extra fees so who else has any ideas on how we can address this issue of broker representation?

    We’ve got to focus on a positive resolution.

  9. The cycle will turn again, as it always does.
    This is all about control, always was, always will be.
    Non banks such as Aussie John wrested control from the banks
    via pricing in the last cycle, the banks have wrested back
    control via the credit crisis & nervous market perception
    in this cycle. They now have the clout to dictate terms.
    As soon as the cycle turns again, and it will, the banks
    will be bashing down our door for our business. For there
    to be a healthy industry for us all, customers, brokers,
    banks and non-banks alike, we must support competition.
    No industry association is as powerful as brokers.
    Market forces always determine business direction.
    Only we can influence our future by supporting competition.

    SUPPORT YOUR NON-BANK NOW!!!

  10. Spell check MFAA and you will see it comes up as “Mafia”. This is bang on, we pay them to do nothing for us but allow us to continue our business. Aggregator is another form more like a pimp where they get a cut of what is really yours so that you can do the business and in return you also get nothing. Never have I worked in an industry like this where companies that do nothing hold all the cards. The Banks cut Commissions and Brokers give them more business, Aggregators tell you not to worry as they are here to help you with additional products you can sell to get back to a decent living, oh thankyou for that!Here’s another one COSL, did the MFAA invent that one too?? Lets all pay membership to a mob that will assist in attacking you as a broker in the event that the client has a problem, is that not the job of the Department of Fair Trading?
    Can someone help me with one question……once the new legislation comes in will we be forced to continue with COSL and MFAA/FBAA??

  11. It is comforting to read this sentiment. I was a broker for three years and was really starting to get into the customer service part of the business, rather than the sink or swim.

    But when the commission cuts started to come into effect, and the depth of the regulations became clearer I did some numbers. I was paying an aggregator, a referral company, COSL, PI insurance, MFAA, professional development costs, wages to some support staff, commission cuts to another broker, state Government licence fees, ASIC fees and regular operating expenses. I accept these are normal business costs, but then it dawned on me. As a business operator, bearing these costs and risks, I had no way to affect my rates of pay (other than through volume), the offerings I had to put in front of clients, the delivery systems, no control over the quality of the products or service delivery at the pointy end of the transaction, no certainty at all about product availability (the midnight emails!) and was a very little fish at the bottom of a very big aggregator pond. That is not a good position to be in frankly.

    When my child was born it was a reasonably simple transaction for me, I shut up shop, fired the casuals I had and terminated my broker and let my aggregation and licencing expire. Now I am employed with a good regular salary with built in pay increaes every year, I see my family for breakfast, dinner and the whole weekend and don’t have to put up with these clowns who claim to be representative. I know broking would be more profitable in the long term, but so will investing the trail commission until it ends and then purchasing/starting another business when the kids are a bit older.

    For those who decide to stay, good luck! I fear you will need it.

  12. Wow Econman , that was well put but how about this one , all of the above plus a franchise outlet with fixed costs and franchise fees , a lease, a guarantee placed on my home for the bond for the lease, and the best of it all….wait for it ….If I leave my franchise there is no trail…and if I churn the clients to my new workplace I will sue your behind and pay for QC fees with YOUR trail. I have always said it ,,,Randwick racecourse is full of brokers because thats where MUGS ( mathematical uneducated gamblers ) are at home…
    I still compare the broking business to the real estate business , you have to operate lean , provide great customer service and learn to walk away from very unprofitable business and borrowers….

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