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ISCOVER
With a federal election set to be held in just a few weeks, we’re taking a look at some of the key issues that industry most wants addressing.
It’s been nearly four years since Prime Minister Scott Morrison took up the mantle as Australia’s Prime Minister, meaning only one thing: it’s election time.
This week marks the start of the six-week election campaign, with political leaders already being scrutinised for controversies and blunders. As the federal election fast approaches (now confirmed to be held on 21 May), thoughts are now turning to the issues that matter most for us personally and professionally.
Federal politics has the ability to rapidly and significantly impact the course and trajectory of industries, and this is particularly true for those in financial services.
When the last federal election was held in 2019, the mortgage and finance industry was on tenterhooks to find out the fate of broker remuneration structures, after the two major running sides (the Liberal-National Coalition and the Australian Labor Party) had opposing stances on how broker remuneration should change.
While the banking royal commission had recommended that brokers not only be subject to a best interests duty, but also move to a fees-for-service model (with trail being abolished), there were major concerns regarding the impact this would have on the viability of the broker channel.
Indeed, the inaugural Consumer Access to Mortgages report conducted by Momentum Intelligence at the time found that nearly two-thirds of borrowers (58 per cent) said they would not be willing to pay a broker a fee, while a whopping 96.5 per cent of broker clients said they wouldn’t be willing to pay $2,000 for the service.
A huge amount of advocacy and political engagement had taken place ahead of the 2019 election, with brokers engaging with politicians across the board to discuss the impacts that moving to a consumer-pays model would have on industry.
Indeed, a national campaign was launched by the Mortgage & Finance Association of Australia (MFAA) – backed by industry – to demonstrate the competition and choice that brokers provide and outline what the landscape would look like without brokers.
The Coalition won strong broker favour after it said it would delay any decision on fundamentally changing the structure of broker remuneration until 2022, when a review of broker remuneration would be held.
Meanwhile, the Australian Labor Party said at the time that it would look to ban trail commissions for new loans from 1 July 2020 and introduce a cap on commissions at 1.1 per cent.
To better understand the perceptions, opinions and priorities of the mortgage and finance industry for this upcoming federal election, market research firm Momentum Intelligence – part of the Momentum Group – launched an industry-wide poll in December 2021 to measure and voice sentiments and concerns of participants.
Momentum Intelligence’s head of strategy Michael Johnson commented at the time: “This poll is an opportunity to explore industry-specific issues and insights as a vehicle to bring these issues to light ahead of the election.
“It’s an opportunity for this industry to voice what is important to them at a professional and personal level so that their ideas can be amplified and heard by those in Canberra.”
At the time of the survey, the “mortgage lending industry” (including brokers, aggregators, lenders and loan administrators) had expected that the two political parties would stay true to their commitments of 2019 – and the results demonstrate that remuneration continued to be a major factor for brokers.
What matters most to the mortgage lending industry
The Industry Insight Report: Election Edition received responses from a total of 2,842 professionals across seven sectors between 1 and 15 December 2021.
It found that six out of the seven sectors surveyed preferred a Coalition government and Mr Morrison as Prime Minister (58 per cent to 32 per cent) – with only the legal profession backing a Labor-run government.
Out of a sample of 372 mortgage lending professionals (including brokers, lenders and aggregators) responding to the poll, 71 per cent indicated a voting preference for the Liberal-National Coalition, compared to 22 per cent favouring the Labor Party. Seven per cent of respondents said they didn’t know how they would vote in the upcoming May 2022 election.
The majority (59 per cent) favoured Mr Morrison as Prime Minister, while 18 per cent said they would prefer Opposition Leader Anthony Albanese and 23 per cent said they didn’t know.
Alongside real estate agents, the mortgage lending industry had the greatest margin of preference for retaining Mr Morrison in the top spot over Mr Albanese.
The mortgage lending sector revealed that the economy, small-business interests and taxation were their top priorities for the next election (at 74 per cent, 60 per cent and 42 per cent, respectively).
Additionally, a significant number of mortgage lending sector participants highlighted concerns relating to the review of broker remuneration and trail commissions, and the impact on consumer outcomes.
“I am gravely worried about any potential changes to broker trail or remuneration. If we are to lose trail or move to a fee-for-service model we won’t be able to afford to keep our staff and will end up being negatively impacted greater,” a participant identifying as a Coalition voter said.
Several respondents, including another Liberal voter, a Labor supporter and a participant who was undecided, indicated their vote would be determined by the attitude of parties to broker remuneration.
“Leave our remuneration model ALONE!” a Labor voter wrote.
“Enforcing a fee-for-service model would be highly detrimental to consumers and the entire broker industry. If Labour persist in their attempt to enforce this, it would absolutely change my vote.”
Levelling the playing field
However, less than a month after the survey results were released – Labor MP Stephen Jones, shadow assistant treasurer and minister for financial services and superannuation – revealed that the existing arrangements for broker remuneration would remain unchanged under a Labor government.
As the polling undertaken by Momentum Intelligence took place before the Labor MP’s recent repositioning on remuneration, it is unclear if broker preferences would have since shifted.
A few months later, in March 2022, it was revealed that the federal government would be shelving its broker remuneration review this year – with Assistant Treasurer Michael Sukkar suggesting that there was no real concerns with broker commissions (see page 38 for more.
Given the changing stance, and the release of more election promises from both sides of the political spectrum, Momentum Intelligence is launching another election survey to take the temperature of industry and understand how much, if any, the remuneration changes have impacted voting preferences.
You can respond to the Federal election poll, here.
Discover more about what the two main parties think about the broking industry in the April edition of The Adviser magazine, out now.
[Related: Industry celebrates having certainty over remuneration]
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