Thank you to everyone who supported mortgage brokers in Australia by signing the petition to ask the Government to commit to allowing time for an industry review before dismissing loan commissions.
As most of you would know, I have been in the Mortgage Broking Industry for 16 years now and seen many versions of commissions and fee-for-service scenarios. The industry had to change; certainly some of the big banks (as we heard from the commission) and any mortgage broker who may have been acting improperly needed to be held to account and a review of practice is a part of progress.
There are, according to news.com.au, 16,000 mortgage brokers across Australia, who employ more than 27,000 people but sixty percent of all Australian residential mortgages are settled by brokers. That translates to a lot of borrowers who would be affected by any knee-jerk responses to the commission's recommendations.
Thankfully, and considering the amount of people involved, the recent Government decision to rethink the timing of any changes is a welcome one. The main points of the recent announcement is that:
The expected ban on trail commissions will not proceed at this stage, and instead
There will be a review by the Financial Regulators and the Australian Competition and Consumer Commission (ACCC)
There will be also additional legal obligations to ensure that all morgage brokers act in the interests of their clients
These are great results. As a broker, I'm not worried about changes to our current practices; I've seen most of them before, but taking appropriate time to make these decisions is the right thing to do.
And as everything ends up being a political football, Labor then announced that if they win the next election that they will flatten commissions to ensure that there is no financial incentive for brokers to recommend a product that might give them more commission regardless of whether that is in the best interest of the borrower.
I manage my business ensuring that I am as transparent as I'm able to be with my clients and so I'm very happy to continue to do business that way including whatever additional requirements are included.
Both rather short articles are below if you'd like to read more.
Articles are here and here.