Unsecured credit card raises concerns

by |

It’s one way to diversify revenue in a slowing market, but the idea brokers will soon be helping clients into unsecured credit cards isn’t sitting well with some industry observers, suggesting it runs counter to their primary mandate.

“OK, I believe in widening revenue opportunities,” Paul Mangion, an MCC broker in Mississauga, told MortgageBrokerNews.ca, “but not with unsecured credit cards when we make so much money refinancing people to pay for this type of debt.

“When have you seen a professional, educated individual selling credit cards at the mall?”

The comments echo the minority of responses to a MortgageBrokerNews.ca article last week, announcing a move by one of the industry’s largest broker networks to brand an unsecured credit card with its own name. Its brokers and agents can begin to offer the Visa cards to past and current clients starting next month.

The move has been largely heralded by brokers in and outside the network as a sign of progress and industry maturation.

“This is something I have been suggesting our industry needs for years,” wrote one MortgageBrokerNews.ca reader.” I am glad to see it has come to fruition.”

Still, others have expressed some of the same qualms as Mangion, suggesting the move could undermine broker reputations.

“Cross selling life insurance, debt settlements, insolvency counseling is a good thing for the consumer,” he said. “Selling credit cards makes us look cheap.

“The big banks push the government to make it harder for people to refinance their house and we argue that the banks are the problem with their easy credit cards and the rules should actually be changed on credit cards and not mortgages.”
 

  • Suz on 2012-10-11 3:45:57 AM

    When the battle over the mortgage rule changes was forefront, one of the biggest arguments from brokers and brokerages was that consumer debt/unsecured debt was a bigger contributor to overall household financial stress and problems, and should be the target of change.
    “The big banks push the government to make it harder for people to refinance their house and we argue that the banks are the problem with their easy credit cards and the rules should actually be changed on credit cards and not mortgages.”
    Now part of our industry is pushing unsecured credit card debt...? Seems it contradicts the issues and arguments that were put forth to the Finance Minister during their sit down sessions prior to the mortgage rule changes. Interesting !

  • Deepak Bansal on 2012-10-11 4:03:06 AM

    Saying that "Selling credit cards makes us look cheap" is only true if we ALLOW it to make us "look cheap". What I'm saying is that we are all professionals, and if we ALL continue to work in a professional manner with our clients, we would only ever offer an unsecured credit card to our clients if it was in the client's best interest. Unlike the Banks, that use this as a "revenue stream" and try to offer cards to anyone with a heartbeat, we need to stay professional and use this as a tool within our toolbox, only use as needed, and not rely on this as an additional revenue stream. Its when brokers start to cross-sell the product to each and every client they meet for revenue-generating purposes rather than what is SUITABLE for the client that we ALL begin to ruin the image of the Mortgage Professional. Before cross-selling a product, we need to always ask ourselves: "Will this be in the client's best interest?" Always ask yourselves this before recommending ANY product and we'll always remain professional in the industry's and consumer's eyes.

  • lender for many years on 2012-10-11 4:55:37 AM

    Really? Really? Who said the broker would be hawking the credit cards at the mall??? Exercise some professionalism. It is all but impossible to exist in today's world without a credit card so why wouldn't a mortgage broker offer a credit card to a client when the client is signing the mortgage approval? Having your super broker companies name on that card is brilliant. A constant reminder to your client of who arranged their mortgage. This is not advocating running up debt, it is called service added and it is how successful companies are built. We should be offering life insurance as well (as long it is a quality term product)as many broker s do now. I guess I have to stop reading these inane news stories as they must just be put out because there is no other news to publish.

  • Jeff on 2012-10-11 7:20:41 AM

    I don't mind this. I think although we use the term mortgage brokers, we are in the business of providing financial services to people. I look forward to the day we have an option to provide bank account services through a non-branch banking service so our clients do not have to go to the branches of the banks to do banking anymore.

  • Suz on 2012-10-11 8:02:28 AM

    Everyone makes valid points, In my comment I just meant that I thought it interesting that brokers are now offering the type of product, that as a whole the industry was blaming for the high consumer debts issues... Now, That being said, many of your points are very valid, in maintaining a stronger connection with our clients, and offering flexible product lines. Curious who the lender would be on these un-secured offerings?

  • @kiltedbroker on 2012-10-11 8:57:12 AM

    Whats next - a mortgage broker who buys and sells gold - oh... wait a minute. Crap - Iv'e got nothing.

  • BC Broker on 2012-10-11 9:10:16 AM

    This is a great way for DLC to leverage its sales force. Gary makes a good point about the client getting a reminder of DLC everytime its used. Note however that the company providing the card knows the client came from a mortgage broker. You've just handed them a hot lead.

  • Derek Rowley, RMA on 2012-10-12 5:33:46 AM

    This comment is for Jeff

    KUDO to you my friend - you've got my vote. Any chance of you running against Flaherty. I will gladly be your campaign manager.

    Derek Rowley

  • Jamie Gale on 2012-10-13 5:16:35 AM

    I think it's fair to say that Paul Mangion would likely have a different tone if it was his company that had come up with the idea. This provides strength to a competitor and that is the true root of the debate.

  • Bill Jones on 2012-10-16 5:07:30 PM

    This "idea" has been kicking around for years. Kudos to DLC for actually getting it done - it IS a great marketing idea and because of that it will be interesting to see how truly prudently it is dispensed to clients. My thinking is that just like white label mortgage products, credit cards will eventually be available to others companies as well (leasing anyone?). You can spin the pro and cons of it any way you want to fit your agenda. I gotta say though that this pontificating between mortgage companies is rivaling that of the US election - it is getting soooo tiresome. Oh, and no one better copy my "free chimney sweep with every mortgage" idea.

  • John Dearin RPA, AMP. on 2012-10-11 5:35:57 AM

    Who is hawking credit cards at the mall? EVERYONE. Just about every store now has credit cards, phone cards,gift cards. It is not the provider of credit cards that is the problem, it is the people that abuse them. Next we will have give up providing gambling, alcohol etc. because there are those out there that will abuse them.

    I will sell, hawk, push these credit cards on my clients as they need them to establish credit to even get a mortgage, BUT I will first look at their credit reports to see if they deserve one. If they don't, they can go to the banks and get one.

    I see no less professionalism selling credit cards as selling "B" money. There is a need, it will always be with us, why should we leave it in the hands of bankers? The sooner we can compete with offerings to our clients that the banks can offer, the sooner we will be able to compete with the banks and increase our client base.

Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions