Mortgage broker body expels 1,500 members

The Mortgage and Finance Association of Australia has cancelled the membership of 1,500 members who failed to meet the industry body’s education requirements.

Around 1,500 of the peak mortgage body’s 13,000 brokers failed to meet a requirement to achieve a Certificate IV in financial services – despite being given almost two years to do so.

But many brokers welcomed the move, which MFAA chief executive Phil Naylor described as a wake up call for the industry.

“A lot of people are surprised that we’ve taken this action. But we make no apology for setting the bar high for professional standards,” he says.

Refund Home Loans Managing Director Wayne Ormond said all of his 300 franchisees hold a Certificate IV.

“I can’t believe more people didn’t complete it – it shows they’re not serious at all, they have no commitment to the industry… everybody’s been warned and warned that you have to have [Certificate IV] by this date.”

And Mortgage Fair CEO Andrew Gooding said the certificate is “not an onerous requirement”.

“If any [brokers] aren’t willing to make the time or cost investment in this, which is really pretty small, you’ve got to ask how seriously they take the advice they give to customers.”

He says the changes will give consumers a higher degree of comfort. “Some brokers may hold a high degree of competency through their experience, but it’s impossible for the consumer to assess this without a standardised educational requirement.”

The MFAA announced its new educational requirement as a transitional phase in 2007. Members will be required to hold a Diploma in financial services “in the next few years”, Naylor says.

This means the Association will hold stricter requirements than the incoming National Consumer Credit Protection Act, which will regulate mortgage brokers at a national level for the first time.

But Gooding called for even higher educational requirements in the industry, saying there would still be a gap between the mortgage industry and other financial services which can often require an advanced diploma.

“Mortgages by their nature involve large sums of money, compared to some financial advice, so it seems there is a disparity there in the qualifications required.”

Naylor hopes the association’s remaining members will recognise the importance of gaining a diploma qualification, saying he was “disappointed” that so many had already failed to do so.

But he defended the decision to allow members so long to complete the Certificate IV, despite the fact that it can take as little as a week and can be completed by correspondence.

“I thought we were trying to be reasonable and because our members are very busy running their businesses we felt that period of time was the right balance.”

Brokers whose memberships were cancelled will not be barred from practicing, although many reputable lenders require brokers to have MFAA membership.

Naylor warned consumers who may not know if their broker’s membership was cancelled to check the MFAA website, which lists all members.