Expelled mortgage brokers have no claim to membership fee refund: MFAA CEO

MFAA CEO Phil Naylor has hit back at mortgage brokers who claim they should be refunded their membership fees after being kicked out of the industry body for not completing education requirements by January 31.

The peak industry body announced last month that it had cancelled the memberships of 1,100 mortgage – around 1 in 10 members – for failing to obtain a Diploma in Financial Services or equivalent qualification necessary to become MFAA trademarked ‘Credit Advisers’. 

The diploma qualification is an MFAA requirement.

Credit regulator ASIC only requires that licensed mortgage brokers obtain a Certificate IV qualification.

“The MFAA has terminated the membership of some of its most senior and experienced members who see no merit in obtaining an additional educational qualification when they have been very successfully writing home loans for many years,” wrote a disgruntled mortgage broker on PropertyObserver.com.au.

“However, the MFAA is refusing to refund the members subscription fee of $422 despite discontinuing the members membership and the provision of the services that the fee pays for.

“Surely if the MFAA ceases a members membership how can it justify not refunding the membership fee?” 

Naylor told Property Observer these brokers had “no entitlement to a refund when they renewed [their annual memberships] knowing full well the conditions of membership. 

“Those members had their memberships ceased because they had failed to satisfy a well-publicised membership criteria for loan writers.  This was after many reminders over the past three years and warnings that their membership was at risk if they failed to achieve diploma or FastTrack status (available to existing members with more than five years’ experience). 

“Any member that renewed their membership in the past two years would have been aware that a condition of membership was that they achieve the above mentioned status by, originally, July 1 2012 – later extended to January 31 2013. 

Naylor said he was confident that a significant proportion of those who had their memberships cancelled were now completing the required courses and would be reinstated over the next month or so. 

“A stream of completions are coming into us every day. 

“We are confident that well over 90% of members will have satisfied the requirements by the end of May,” he says. 

Last year, MFAA membership numbers fell from around 12,000 as of June 2011 to 11,000 as of June 2012 despite the industry body taking on additional 1,295 new members, a review of MFAA annual reports shows.

Brokers make up 98% of the MFAA’s member base. 

The loss of so many brokers will impact on the MFAA’s future bottom line with its 2012 annual report showing that more than half of its $9.2 million annual revenue (inclusive of GST) came from membership fees. 

Membership fees including GST totalled $4.9 million in 2012 down from $5.1 million in 2011. 

Events, principally the MFAA's annual conference, bring in $2.3 million.

Training revenues, including courses provided to mortgage brokers add up to $719,000, but is a growing source of revenue.

The MFAA recorded an annual profit to June 2012 of $25,000 compared with a loss of $696,000 in 2011.