The furore over consumer group Choice's mortgage switching campaign may be a "storm in a teacup" according to one broker.
The Big Bank Switch campaign promoted by Choice and run by One Big Switch, aims to register mortgage holders and lobby lenders for group discounts. One Big Switch has revealed it will receive commissions for any loans it originates, and Choice has disclosed it will receive a referral fee. The campaign has faced criticism from the MFAA, but Laurie Parkes from Front Runner Mortgage Group has told Australian BrokerNews he believes the campaign will sputter out.
"I think this will blow over once they realise it's not going to work," Parkes commented.
Parkes questioned whether the campaign's aim of securing group discounts will be effective. Without providing credit assessments or calculating serviceability for clients, Parkes said the campaign is unlikely to generate the discounts it is expecting.
"Lenders are going to assess each application on a case-by-case basis, so market forces will come into the equation," he said.
Regardless of the campaign's efficacy, Parkes said Choice should be called to account for its involvement.
"Where has their independence gone when they're doing this? Choice is supposed to be an independent body, and yet they're going to take referral fees," Parkes said.
The MFAA has also criticised the consumer group's involvement in the campaign, and called into question the legal standing of One Big Switch. Though One Big Switch holds an ACL and is a member of COSL, the company claims it is not providing credit assistance and therefore is not required to abide by NCCP regulations. However, the MFAA has challenged this assertion, and has requested an ASIC investigation into the claims.