The Importance of the Current Broking Model
Westpac CEO Brian Hartzer has noted the importance of the role that mortgage brokers play in the lending space, as he appeared before the House of Representative Standing Committee on Economics.
"We (Westpac) recognise that brokers are an important part of competition in the market and creating the perception for customers that they can see the market more effectively," the CEO said.
"Brokers provide price transparency, they provide a service in terms of convenience of going through paper processes and the like.
"In many cases, they (also) provide an ongoing relationship with the customer as circumstances change."
However, Mr Hartzer said that the bank is "certainly in favour" of more transparency in the broking industry and noted that a shift toward a fees-for-service model in the broking industry would be "worth considering".
"I've been on record saying that I certainly think it's worth considering whether brokers should charge customers directly and explicitly," Mr Hartzer continued.
However, he said that such a move would be "tricky", noting that it would raise questions as to whether a broker is acting as an adviser.
"(There) has been some questions about what the broker obligation to the customer is, and (whether or not) there should be more obligations there.
"We would say that it's worth considering, but the (answer) is kind of in the name 'broker'. They are essentially, on one level, a shopping service for the customer, helping them navigate as opposed to advising them explicitly about what they ought to do."
He went on to say that it was absolutely worth examining and that they (the bank) thought more transparency was a good thing.
Contributor - The Adviser.