At a grassroots level, Mortgage Broking has opened up home and commercial lending to genuine market forces and true competition, resulting in a better deal for individual borrowers.
Sometimes this is not as neat and tidy and easily controlled as regulators would like it to be. Which is not to say that major banks don’t face their share of crises, rogue employees, theft and client mismanagement. What is clear is that lending profit margins for the major banks, and their market share has fallen directly in line with the growth of the Broking industry. At the same time customers have continued to choose Brokers despite our comparatively small advertising budgets.
The outcomes of a scaling back of the Broking industry would see reduced competition as major lenders would buy up the smaller ones that would no longer be viable without the negligible fixed costs and flexibility of a Broking sales force that in turn allows them to create competitive loan products. Tens of thousands of small businesses would be destroyed. This reduced competition would see the return to bank profit margins of decades ago and inevitably more expensive loans for borrowers. The result would be a huge drag on the Australian economy as billions of dollars would be taken from household budgets and put on the bottom line of the balance sheets of the major lenders.
Any attack on the Broking industry needs to be viewed in line with the vested interests that stand to benefit from its demise. Certainly consumers and the Australian economy would be the big losers, the major lenders the big winners.
For our part, as Mortgage Brokers, we are the custodians of this industry and need to ensure we are always working in the interests of our clients – and seen to be doing so. As I have stated in this book, the system of Mortgage Broking puts our interests very much in line with our clients. Irrespective of that, as small, competing businesses we are not well co-ordinated to defend our industry as a group, so we can only do the best we can individually to continue to enhance the standing, professionalism and integrity of our industry — which all starts with a view that we serve only one master, our clients.