FBAA criticises lenders for significant delays in loan processing

Feedback from members as part of a poll conducted by CoreData for the Finance Brokers Association of Australia (FBAA) has revealed that 60 per cent of finance and mortgage brokers have experienced delays in loan processing over the past six months, a figure labelled as unacceptable by the association.

FBAA managing director Peter White AM said while it was not surprising as he has previously highlighted the issue, the lack of responsiveness from lenders was frustrating.

The survey also highlighted other issues brokers faced when dealing with lenders, with 45 per cent citing “poor communication from lenders” and 39 per cent “technical issues with lender systems”.

“The fact that so many brokers regularly face these issues when processing loans indicates not only that the system is inefficient, but that some lenders are not making any effort to improve,” Mr White said.

Members also listed “inflexible requirements for borrowers” (35 per cent), “complex documentation requirements” (31 per cent), “post-settlement issues” (30 per cent), and “lack of transparency in lending terms” (26 per cent) as difficulties.

Mr White has previously called for standardised documentation around service level agreements to speed up loan discharges for borrowers wanting to change lenders.

“Three years ago we reported that banks were taking 14 to 30 days to finalise discharge documents, even after many approaches and requests, and I think many brokers still have a distrust of lenders’ motives.”

“Recent comments by the CBA and Westpac have made it clear that some banks are intentionally trying to discourage business through brokers, so it’s not unreasonable for brokers to suspect that delays are being intentionally ignored.”

He added that banks must realise that the more they delay and disadvantage customers, the less likely those customers are to return.

“This recent poll shows that some lenders are still not doing well enough. They need to improve their processes and their communication.”

One solution, according to Mr White, is to create better service level agreements.

“Lender requirements are largely the same, and universal, standardised loan discharge agreements, loan application forms and privacy act forms should all be available in today’s marketplace.”