ACCC reviewing compulsory mortgage broker industry body membership

The ACCC is investigating whether it is in the best interest of consumers for some mortgage broking groups and lenders to make it compulsory for their brokers to be members of industry body the Mortgage and Finance Association of Australia (MFAA).

Two of the industry’s biggest franchise groups, Aussie Home Loans and Mortgage Choice, require their brokers to be members of the MFAA rather than accept membership of rival industry body, the Finance Brokers Association of Australia (FBAA).

Membership of the MFAA is not a requirement of the National Consumer Credit Protection Act, the legislation introduced in 2010 that requires brokers to be licensed and sets out standards for conduct and compliance.

In 2008, before the introduction of compulsory licensing, the ACCC granted permission to Mortgage Choice, Aussie and others to enforce the requirement (known as third-line notifications) that their brokers be members of the MFAA.

However, it is now seeking industry comment and has written to about 70 industry participants including brokers, aggregators, banks and ASIC as part of its review of this decision.

In the letter written by the ACCC to industry stakeholders it says it could revoke these notifications at any time "if it determines that the conduct to which the notification relates no longer delivers a net benefit".

The FBAA claims to be an industry body run by brokers for brokers and says on its website that “all but one elected executive positions are held by practising finance brokers in their own right”.

It says enforcement of compulsory MFAA membership is anti-competitive.

“[These practices] restrict consumers’ ability to have the right of choice as to which broker they use and what lenders that broker is able to access,” said FBAA president Peter White in the organisation’s ­submission to the ACCC on the matter.

The MFAA has strong lender representation and has been accused in the past of having a strong leaning towards the major banks, counting the Commonwealth Bank and NAB as its “platinum industry partners”.

Mortgage Choice has said previously that it would defend its decision requiring compulsory membership. 

“While we appreciate MFAA membership is not a conditional requirement of NCCP, Mortgage Choice is committed to the MFAA and strongly believes in the need for an independent industry association,” the franchise group said last year.

A spokesperson told Property Observer today it was "waiting to hear from the ACCC regarding their decision".

 

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

Comments

Be the first one to comment on this article
What would you like to say about this project?