The credit intermediary acts as a bridge between the client and the bank. Its task is to offer credit products to the consumer (e.g. cash loan).
Who is a credit broker?
As part of the services provided, the broker gives advice to the client, helping in choosing the right offer. Furthermore, it has the right to conclude a loan agreement on behalf of the financial institution.
A credit intermediary usually represents the interests of several financial institutions. As part of the services rendered, it charges a commission. The salary is paid by the bank or the borrower directly.
In most cases, however, the financial institution pays the fee. It is worth knowing that the cost of the agent’s services is included in the price of the financial product offered (e.g. mortgage, credit card). Therefore, the client will pay for the broker service out of his own pocket anyway.
Who can become a loan broker?
An intermediary selling financial products (including payday loans) should have a number of so-called soft skills. That is – ease of making contacts, persuasive skills, etc. In addition, knowledge in the field of financial management and banking is welcome.
There are no pre-defined rules for practicing this profession. Anyone can become a credit counselor. Therefore, you should be aware that in extreme cases a potential borrower may be served by an incompetent person, 100% profit-oriented.
How much does a loan broker earn?
People working as intermediaries are in the group of well-paid Poles. It is worth noting that in most cases they work as part of their own business. The consultant’s main earnings are a sales commission.
This usually ranges from 5 to 7 percent of the value of the product sold. Monthly earnings can reach from 5 to 6 thousand USD. Of course, the involvement and the number of customers served are very important. For comparison, the average gross salary for the whole country is USD 4,353.55. In turn, the minimum wage is set at USD 2,000.
Mortgage Act – changes in the work system of brokers
After many years, the mortgage finally got its own bill. The new regulations entered into force on July 22, 2020. The Act on Mortgage and Supervision of Intermediaries introduces, among others the obligation to grant loans in the currency in which the borrower collects remuneration. The regulations also prohibit vague advertisements for mortgage products that may mislead the recipient as part of the message.
In addition, the Act regulates the work of credit brokers. Under the new regulations, the agent’s work will be pro-consumer. The regulations will eliminate situations where the intermediary puts his interest above the quality of services rendered.
What obligations does the Act impose on brokers?
The Act on Mortgage and Supervision of Agents imposes a number of new obligations on those working in credit brokerage:
- Under the new regulations, the broker is obliged to inform the client with which banks he has established cooperation. In addition, he should explain the nature of the services performed and what the complaint procedure looks like.
- Furthermore, the broker is obliged to determine whether he provides consultancy services.
- The broker must provide the amount of his remuneration. The regulation raises a lot of controversies because advisors and agents are afraid that customers will give up their services for the direct purchase of the product at the bank.
- All necessary data should be included in a special information form. The broker is obliged to present the form at the beginning of the conversation with the client.
Controversy with the entry in the Polish Financial Supervision Authority and stamp duty
Pursuant to the Act, a credit intermediary is required to submit an application for entry in the special KNF register. The anticipated time is 6 months from the entry into force of the new provisions. Interestingly, the applicant is required to attach proof of stamp duty in the amount of USD 616 to the documents.
The obligation arouses controversy because there is no provision in the Act on the entry fee. The Polish Financial Supervision Authority issued such a requirement. The payment is regulated by law only in the case of consumer credit brokers and loan companies.
Similar regulations for insurance agents
Similar provisions will apply to insurance agents. The Act on insurance distribution adopted on July 25 introduces regulations to improve the quality of services offered. The legal action was prepared in accordance with the IDD EU directive.
An insurance agent, just like a credit intermediary, will have to disclose to the client the amount of his salary. Furthermore, the policy distributor will have to indicate whether the fee received is paid directly by the client or the insurance company. The new regulations will also apply to insurance brokers.
Will the broker’s profession be a thing of the past?
The Mortgage Act allows for detailed information on loans to be sent to the so-called comparison websites. In this way, the customer will be able to check and compare several offers without leaving home. Similar solutions can be observed in the insurance industry. Insurance comparison websites have been at the forefront of online policy sales for years.
Therefore, it can be argued that fintech solutions and changes in the law may cause that soon the profession of both credit and insurance brokers may become a thing of the past.
A similar phenomenon can be observed in payment methods. Poles rarely use traditional money. Non-cash transactions are becoming increasingly important.