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The Finance Brokers Association of Australia (FBAA) has said that some banks are reportedly attempting to prevent mortgage brokers from using automated rate tracking and repricing systems to analyse their back books.
These systems could help existing customers access lower rates, but some banks are allegedly threatening brokers with de-accreditation for using them.
FBAA managing director Peter White AM said the association is aware of these actions and believes the banks are citing privacy issues as the justification.
However, White disputed this claim, saying that privacy concerns may not be the true reason in every case.
“They appear to be claiming it is a privacy issue, and while this may be legitimate in some cases, I don’t accept this is the entire reason or even the reason at all in some cases,” White said.
“If banks are using this as another way to increase profits, it would be quite unconscionable as it means customers are being intentionally disadvantaged.”
According to White, the feedback he received from members did not specify one particular online tool or bank; however, he reportedly had heard that several members had “received directives from lenders not to use these systems”.
“The real issue here is that banks are restricting advancements in technology that have been developed to assist existing borrowers. These borrowers have a right to access the same lower interest rates offered to new bank customers, rather than becoming victims of rate creep,” he said.
White said that mortgage brokers have a duty to act in the best interests of their clients, which includes reviewing rates regularly.
“Any attempt to outlaw automated rate tracking and repricing systems prevents mortgage brokers from properly servicing their customers. We all know that many banks love rate creep for their existing clients while they offer great incentives to new customers,” White said.
“But when back book pricing isn’t being reviewed it’s the customer who loses out, and over the long term the amount could be significant.”
White urged brokers to embrace technology, saying that manual tracking is less effective and that banks are aware of this.
“Brokers should be embracing technology because manual tracking is not as effective, and the banks know this,” White said.
White further criticised the banks’ approach to customer service, saying that the banks are sending the wrong message by restricting these rate reviews.
“Lenders must understand that doing the right thing generates customers for life,” White said.
White said that some banks only offer better rates when customers are considering refinancing.
“Time and time again we see banks offering better rates only when the customer is considering, or starts the process of, refinancing,” White said.
He urged banks to encourage back book reviews in the most effective way for brokers and borrowers alike, rather than waiting for customers to initiate refinancing.
“I’d urge banks to instead encourage back book reviews by whatever way is best for borrowers and the most professionally proficient for the broker, and maybe the customer won’t need to consider refinancing,” White said.
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