A CHOICE investigation into the mortgage broking industry has uncovered a culture of sales above all else and training that treats customer concerns as a problem to “overcome”.
The investigation comes following scathing criticism of the industry during the Banking Royal Commission and a cynical lobbying effort from industry to scuttle reform since.
CHOICE journalist Andy Kollmorgen studied the minimum qualification all mortgage brokers must meet, a Certificate IV in Finance and Mortgage Broking and reported on the experience. He found an industry light on service and heavy-handed on pressure sales. Kollmorgen completed the course in about ten working days.
“I took this course thinking it would focus on the finer points of how to find the best possible loan for the client. But the real focus was on sales and lining up clients for the big banks. The training involved filling out real loan applications, which happened to be from none other than ANZ and Westpac” says Kollmorgen.
“The course provider gives trainees six months to complete the course, and three tries for each section, including quiz questions that are often laughably simple. I became a mortgage broker in 10 days. There is a substantial amount of material to get through, particularly the sections focusing on sales, marketing and office skills. It’s all about drumming up business.”
Read the full investigation at CHOICE.com.au/BrokerTraining
“Aside from some basic maths and learning how to fill out some forms, this was a sales course first and foremost. I learned how to land the customer and seal the deal, not how to match the customer with the best possible loan I could find.”
One of the most troubling revelations out of the investigation was confirmation that brokers are encouraged to “overcome” what the customer wants:
“To develop into a successful mortgage broker you will need to become skilled at overcoming objections that prospects raise during the enquiry and pre-application stages. An objection is anything that the prospect says or does that interrupts or blocks the progress of the mortgage transaction.”
(National Finance Institute curriculum – Certificate IV in Finance and Mortgage Broking)
And quite alarmingly:
“Selling product to a client is not always easy because of the client’s own preferences and risk tolerance. They will provide many objections and the mortgage broker must overcome these.”
(National Finance Institute curriculum – Certificate IV in Finance and Mortgage Broking)
The investigation comes as the mortgage broking lobby aggressively attempts to fight off recommendations from the Banking Royal Commission that would require them to act in the best interests of their clients.
“The mortgage broking lobby already fought off attempts to remove commissions that the Royal Commission said create poor outcomes for their customers and now want to escape any consequences from their behaviour highlighted at the Royal Commission” says CHOICE CEO Alan Kirkland.
“This is an industry that relies on a fake brand of service and expertise, but actually delivers high pressure sales. Fighting against a requirement to provide basic customer service for people making a major financial decision is disgraceful.”
“People turn to mortgage brokers to help with one of the biggest and riskiest financial decisions they’ll make in their whole lifetime. They should be able to get advice they can trust.”
CHOICE says requiring brokers to act in the best interests of their customers will reward good and ethical mortgage brokers who have been let down by their lobby groups. A best interests test, well enforced will help drive predatory sales practices away from the sector.
In the meantime, the consumer advocate has released a guide for finding a good mortgage broker (CHOICE.com.au/FindAGoodBroker
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