Brokers blasted by corporate watchdog

MORTGAGE brokers have been slammed by the corporate cop for not doing a good enough job in finding customers the best deals.

And they are working with regulators to deliver consumers a better way to compare mortgage interest rates and save themselves money.

The report puts heat on the industry, which has come under intense scrutiny in recent years for the commissions and incentives brokers receive from lenders in exchange for pushing their loan products.

The damning new findings were released by the Australian Securities and Investments Commission yesterday.

The report examined 300 consumers who went through the home loan process and surveyed another 2000 customers.

It found the following: CONSUMERS expected the best deal when using a broker; BROKERS were inconsistent in the ways they presented mortgage options to consumers, sometimes giving little or no detail of their options or reasons for their recommendations; and FIRST-HOME believed they could score themselves a better interest rate on their home loan, while some were unsure they even got a good rate.

More than one in two Australians use a mortgage broker when taking out a loan. The customer does not pay for the service, instead the lender pays the broker commissions.

ASIC commissioner Sean Hughes urged the industry to do a better job.

“Lenders, brokers and aggregators must step up to make it easier for consumers to meaningfully compare loan options and for brokers to communicate how a home loan option has been selected for them,” he said.

ASIC has begun working with regulators to develop a new home loan interest rate tool to improve price transparency for consumers so they can make fair comparisons.