Macquarie Bank might be courting a backlash from mortgage brokers after revealing changes that will govern the types of people who can market its mortgage products.
Under a new policy that takes effect on 14 September Macquarie will be asking brokers to furnish details about their criminal records and personal financial histories before allowing them to recommend the bank’s home loans.
In a notification sent to brokers last Friday, Macquarie said it was updating application forms for broker accreditation to include more questions about applicants’ backgrounds.
“A copy of our home loan broker accreditation application form is attached for reference. Additional documents may be required and will be confirmed on a case-by-case basis,” the bank told brokers in the memo.
“There are some scenarios where we will not consider accrediting a broker. These include: a current or previous bankruptcy or debt agreement (Part IX or X), a broker with a serious criminal record, (and) current or previous banning or disqualification by ASIC.”
While it seems reasonable that mortgage brokers disclosing serious criminal records and ASIC bans should not be selling mortgages, several brokers told Banking Day they believed it was unfair that Macquarie plans to deny accreditation to people who had met their obligations under enforceable debt agreements in the past.
“Just because you’ve entered a personal insolvency agreement in the past should not constitute a basis for assessing your character or your competence as a mortgage broker,” one home loan intermediary said on condition of anonymity.
“The wording of the memo sent out last week by Macquarie is pretty clear – they won’t even consider accrediting a broker who previously negotiated an insolvency agreement to clear their debts.
“I don’t think that’s fair.”
Macquarie appears to be breaking new ground with the new accreditation criteria, as most other banks and non-bank lenders are less interventionist about screening mortgage brokers.
The traditional view in the industry has been that mortgage brokers act as authorised agents of prospective borrowers and cannot be governed in the same way as employees.
Most lenders have been content to rely on aggregators to act as gatekeepers of the mortgage broking industry.
Mortgage brokers typically operate as formal credit representatives of aggregation platforms, such as AFG and the NAB-owned Choice network that each hold full credit licences.
Given that there are no laws or professional rules preventing former bankrupts from entering the mortgage broking industry, Macquarie’s revised policy could be vulnerable to legal challenge from one or more industry bodies.
However, in its final report the Hayne Royal Commission highlighted deficiencies in the training and credentialing of mortgage brokers and recommended improved screening of industry participants in line with reforms in the financial planning industry.
The timing of Macquarie’s accreditation changes is intriguing, with the new statutory requirement for brokers to act in the best interests of borrowers scheduled to take effect in July next year.
Macquarie cannot afford to lose the goodwill of broking channels because they account for more than 95 per cent of the bank’s home loan originations.
APRA data indicates that Macquarie has been one of the fastest growing mortgage lenders in the last five years. It has doubled the size of its loan book to A$50 billion since 2015.
Banking Day sought comment from Macquarie and the Mortgage and Finance Association of Australia about the enforceability of the new accreditation requirements.