Australia’s mortgage brokers have hit back at the banking royal commission with a Grim Reaper-style ad that marketing experts describe as a “scare campaign”.

Titled ‘Don’t Kill Competition’, the ominous television advert is the first part of a multimillion-dollar marketing and political lobbying blitz by a peak mortgage industry body.

The campaign by the Mortgage and Finance Association of Australia (MFAA) aims to use “everyday consumers and voters” to “amplify the message intended for decision-makers and politicians”.

In his blueprint for fixing Australia’s scandal-plagued banking and home lending system, Commissioner Kenneth Hayne stipulated that mortgage brokers should be paid directly by the consumer rather than the lender, and be banned from accepting trailing commissions.

The recommendations came as a shock to brokers, with many arguing the changes could crush the industry and kill competition, driving borrowers to the big banks.

Australia’s peak mortgage industry lobby group has launched a multi-pronged campaign against Commissioner Hayne’s recommendations. Photo: MFAA

Consumers will find it “even harder to get a home loan”, pay higher interest rates, and have fewer lenders to choose from should Commissioner Hayne’s recommendations be legislated, the MFAA warns.

The lobby group also urges its members to “contact your federal MP and let them know how you feel”.

‘A world without mortgage brokers’

The ad makes the “same type of fear-based appeal” as the notorious ‘Grim Reaper‘ ad released in 1987 to warn Australians about the AIDS crisis, Australian National University political marketing and advertising expert Andrew Hughes said – and it’s “highly likely” to be effective.

“Most people fear the banks getting more control and the loss of an independent choice as it were, not to mention this is about influencing behaviour at the election, although that is not explicit,” Dr Hughes said.

The television ad begins with a family walking down a dark corridor with doors labelled “non-bank lender”, “leading credit union” and “regional lender” slamming shut before them.

“What would a world without mortgage brokers look like?” the narrator asks.

“Possible legislation changes threatening the mortgage broker industry could reduce Australians’ access to many lenders and mean even less access to credit.”

The family approaches a door at the end of the corridor marked “high interest rate lender” that opens to reveal a menacing man in a suit, framed by red lighting and swirling smoke.

“As competition and choice decline, bank power, and the risk of higher interest rates will increase, leaving Australians to pay the price,” the narrator says.

“Without mortgage brokers you could pay more while the banks profit.”

‘Scare tactic’ campaigns have been shown to be “highly effective” in the past. Photo: MFFA

How fear-based ad campaigns work

The ad has all the elements of a “scare campaign” – where marketers play on the audience’s worst fears regardless of whether or not they’re legitimate – Dr Hughes said.

“It’s based on your fear of something which may happen … in this case that banks take control of the mortgage broking sector and consumers have no choice. Whether it’s true or not doesn’t matter,” he said.

Done in a “very political style”, the ad has consumers and politicians in its sights.

“They’re definitely giving a warning to politicians by trying to get people a bit active and involved in this issue,” Dr Hughes said.

Deakin University consumer behaviour and marketing expert Paul Harrison said the MFAA faces a “big uphill battle” to “convince people that their perspective is more believable than a royal commission”.

“If anything it will reinforce current beliefs. If you already think mortgage brokers are dodgy it would probably be reinforced,” he said.

Dr Harrison said while the campaign is unlikely to be be “effective in changing public attitudes”, it could have a major influence on politicians, particularly those in marginal seats.

“There’s a lot of lobbying going on … and politicians are scared of negative publicity,” he said.

The New Daily contacted the MFAA for comment but did not receive a response by the time of publication.