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The aggregators have welcomed the federal government’s draft bests interests duty as part of a broader push to help the industry “evolve and professionalise”.
Earlier this week, the Morrison government introduced the National Consumer Credit Protection Amendment (Mortgage Brokers) Bill 2019 – containing a new bests interests duty obligation on mortgage brokers, as recommended by commissioner Kenneth Hayne in the final report of the banking royal commission.
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The bill states that brokers “must act in the best interests of consumers when giving credit assistance in relation to credit contracts”, meaning: As an extension to the best interests duty, the bill builds on remuneration reforms proposed by the Combined Industry Forum, which includes requiring the value of upfront commissions to be linked to the amount drawn down by borrowers, banning campaign and volume-based commissions and payments, and capping soft dollar benefits.
The proposed regulations also limit the period over which commissions can be clawed back from aggregators and mortgage brokers to two years and prohibit the cost of clawbacks being passed on to consumers.
Broking industry associations and aggregators alike have largely welcomed the new draft bill, with NAB-owned aggregators PLAN Australia, Choice Aggregation and FAST the latest to welcome the proposed reforms.
PLAN CEO Anja Pannek said the proposed reforms build on the work already undertaken through the Combined Industry Forum.
“As a member of the Combined Industry Forum, we’ve already been involved in making positive changes and have contributed to the conversation with Treasury to drive customer-focused outcomes,” Ms Pannek said.
“PLAN Australia will continue working with industry, government and Treasury stakeholders to ensure there is a robust understanding of the broking industry and the value it provides to Australians.
“We welcome reforms that sensibly bring good customer outcomes to life for mortgage brokers and their customers and enshrine in law what we believe is the best of mortgage broking.”
The PLAN CEO said the group would consult with its members and seek feedback as the consultation process continues.
Stephen Moore, CEO of Choice Aggregation, also welcomed the bill, adding that he will work closely with all parties involved to ensure the reforms are implemented “smoothly and successfully”.
Mr Moore said that Choice would continue to provide its brokers with assistance throughout the reform process and encouraged them to remain positive amid the uncertainty.
“Above all, my message to brokers is this: stay focused and keep a positive and healthy mindset,” he said.
“As our industry continues to evolve and professionalise, I believe brokers and their customers will greatly benefit, but it is imperative that quality without compromise is maintained through what you do.”
FAST CEO Brendan Wright, who also welcomed the draft bill, said that such reforms would provide the industry with further clarity as it continues to make inroads in the market.
“We are seeing greater numbers of consumers and business owners turn to brokers for their credit needs than ever before and, as industry standards continue to improve, we think this trend will remain in place,” he said.
“The exciting opportunity is that the industry and brokers now have a clear roadmap around how to deliver even better service and outcomes for customers, so we believe the future for the industry looks bright.”
MyState Bank's general manager, banking, Tony MacRae, has also welcomed thew proposals, but has urged policy makers to ensure that the changes don't complicate the home lending process for borrowers.
“MyState Bank welcomes and supports proposed mortgage broker best interest duty reforms. We have always looked to work with brokers to ensure that customer needs are fully understood and outcomes are delivered in their best interest," Mr MacRae said.
"It is important that the execution of the proposed legislation is delivered in a way that does not make it more complex or difficult for a customer to obtain home lending support.
"We look forward to working with all stakeholders in refining and implementing changes in an efficient manner.”
[Related: Industry reacts to proposed broking reforms]
