Australia's largest broker group, AFG, has predicted that the industry would haemorrhage over the next year, eventually losing one third of its members. AFG said that 5,000 brokers would be forced out of the industry as a result of increased costs and regulation.
In his article in the latest issue of Your Investment Property magazine, former RBA economist, Malcolm Reid has also sounded the alarm bells as a result of the growing dominance of the big banks.
"As their influence in the market has increased, their attempt to control the independent mortgage broker market has become anti-competitive--- from setting minimum loan applications per month on an individual broker basis rather than on an aggregator basis, to seeking to establish employment rights over independent brokers as a result of having a contract in place with an aggregator," wrote Reid.
"If recent U.K. experience following regulation and licensing of mortgage brokers is repeated in Australia, we are likely to see a halving in the number of brokers operating here, with further erosion of competition and choice for customers," he added.
MFAA CEO Phil Naylor would not comment on specific numbers, but admitted that the losses had already begun. "Everyone in the industry has been estimating broker numbers will fall over the next year or so," he told Your Mortgage. "Our membership is certainly reducing and we're expediting that process by cancelling a number of memberships because people didn't qualify."
Voula Kouroulis of My Choice Finance estimated the number of exiting brokers would be closer to 2,500. She backed the MFAA's decision to dump brokers who hadn't completed their Cert IV.
"They want to make the industry as regulated as possible, just to throw out all the shonks," Kouroulis told Your Mortgage. "It's cleared out a lot of people who weren't really ethical.
There was concern that honest "one-man band" operators might be squeezed by the burden of licensing, Kouroulis said. However, Naylor hoped that would not happen.
"The idea is you're keeping the good operators," he said. "I would think the more professional [brokers] would want to stay in the industry as they would see [more] opportunities."
Collections: Mortgage News