Sam White reveals hopes around clawback and regulatory change

The executive chairman of Loan Market looks ahead to 2022 after a year of challenges

Sam White reveals hopes around clawback and regulatory change

Looking back on the year that was, you’d be forgiven if you thought best interests duty had happened a year earlier. So much has happened in 2021 that it seems like an eternity since BID came into force just 12 months ago. Yet the year kicked off with the game changing piece of legislation that took almost as much preparation for brokers as Y2K did for IT leaders across the globe.

The level of activity brokers faced following this milestone was astronomical. Not only did a surge in enquiries from a refinance boom and a surging property market keep them on their toes, delayed SLAs through the broker channel added stress to the equation for brokers and their clients. A raft of compliance changes in October, dubbed Oktoberfest by many in the industry, also added to the workload, while, more recently, changes by APRA and rising interest rates saw a flood of new enquiries from home buyers and existing mortgage holders alike. Prolonged lockdowns in the country's largest capitals also posed a major challenge.

“It’s been a massive one for those reasons and a pretty challenging environment for everyone, lenders, brokers, aggregators – everybody,” Loan Market executive chairman Sam White told MPA. “Against that backdrop I think everyone was exhausted, people were working long hours, finding new ways to work when they couldn’t see people.”

White was recently honoured for his work in the mortgage industry with a ranking in the Global 100 – an accolade he attributed to the efforts of the entire Loan Market Group. He said while the year was a big one, it held many proud moments for him – particularly due to the good work of brokers in the group.

“Broker NPS scores are still incredibly high - we’re getting scores around 95,” he said. “Most people think that I’m not telling the truth when I tell them that number. That’s against all those turnaround challenges that we had.

“Even though we’ve done 60% of mortgages as an industry, complaints to the industry are down below 1% (according to AFCA).”

He said he hopes these things are taken into consideration when it comes to the review on remuneration scheduled for next year. His other two big hopes for the mortgage broking industry in 2022 are around regulatory changes and clawback.

“It’s been really three years of either getting ready for or implementing regulatory changes,” he said. “One of my big hopes is that we’re done with that now and that the regulators and the politicians give brokers the chance to put this in place and get used to doing business.”

Read more: Regulatory changes lead to more broker fees

When it comes to clawback, White said he hoped brokers started to get alignment on this as well as net of offset.

“I think both of those are important parts of our remuneration structure but with best interests duty now I think having clawback going beyond 12 months does pose a challenge for those that are offering annual reviews,” he said. “I’d like to see an alignment around that in the future and that’s one hope that I’ve got for next year - that we can start to give brokers some consistency.

“Making sure there’s not any conflict around the clawback and net of offset rules and having some sort of standardisation would be really positive.”

Veteran broker Stephen Dinte recently told MPA that since net of offset was implemented in September 2020, brokers had been subject to an “ad hoc application of the legislation” that had resulted in “dire situations.”

“We have a situation where the various lenders apply different methodologies to determine the way they’re going to pay this net of offset and quite often this is to the detriment of the broker,” said Dinte.

Read more: Net of offset – "brokers are being done over"

While net of offset and clawback would likely continue to be part of the broking environment moving forward, White said he wanted to see consistency in the way lenders applied both rulings.

“I think clawback should be limited to 12 months, not go over two years and what I’d love to see is all the banks have a very similar policy for it, that there’s not some banks that offer 12 months and some offer two (years),” he said. “I think having consistency to that would mean that it’s a lot clearer and there’s less room for potential conflict in remuneration structures because of those policies.”