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In a new paper lodged with ASIC, the MFAA has reiterated its view that the so-called point-of-sale exemption (‘flex-commissions’) should be abolished.
This would create a level playing field, the association said, and resolve many of the issues currently ‘perplexing government and regulators’.
“This view was supported in membership feedback as a key focus for the industry on positive outcomes for consumers,” it added.
“We wanted members to know that we have represented them and provided a follow-up submission on behalf of the industry.
“Our document has a clear focus on ensuring that brokers participating in all financing transactions should fully disclose any remuneration in any relevant transaction, including those not regulated by the NCCP Act,” the MFAA said.
The association’s latest position follows its initial February submission to ASIC’s current probe into broker commission structures.
ASIC commenced the review at the federal government’s behest earlier this year, to determine the effect of broker remuneration structures on the quality of consumer outcomes.
Government has requested the review be completed by the end of 2016.
It has attracted wide attention.
For its part, the FBAA has taken the initiative to conduct an independent income appraisal — profiling overseas brokers to show that commissions paid in in this country are fair.
“This will form part of our position that the current commission structure is fair and in no need of a radical overhaul,” the FBAA’s Peter White told The Adviser.
He said the FBAA, too, would continue to communicate its stance to the federal government.
At the coalface, 25-year veteran Martin Vidakovic said in a submission to The Adviser that the once unremarkable broking industry is now firmly under the spotlight, on account of it having reached a growth ‘tipping point’.
He acknowledged the payment review to be ‘challenging’ for the ‘potentially under threat’ broking industry, but warned against suffocating the ‘very reason’ the broking industry works in the first place.
“Many bankers had the courage to leave comfortable employment and set up business in an unproven industry. We were passionate about what could be achieved and could see a vision for the future.
“We are only rewarded financially on our client’s success. If their loan settles, we are compensated by the lenders. If they fail to attain an approval and settlement, we are not paid.”
Instead, Mr Vidakovic called for the standardisation of all commission payments, both upfront and trail, across all financial institutions.
It would serve to minimise conflicts of interest, he said.
ASIC said it would make contact with brokers directly at around the end of July.
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