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The Finance Brokers Association of Australia has urged for calm amid the ongoing scrutiny of the sector, highlighting that “there is not really a problem” in the industry.
The executive director of the broker association, Peter White, said that the current commentary around the broking sector and the number of inquiries being held were “unprecedented, unnecessary and crazy”.
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Stating that the Productivity Commission, the ACCC and the financial services royal commission are “falling over each other in their quest for profile”, Mr White emphasised that ASIC’s “comprehensive review” of broker remuneration is still with the government and yet to receive a formal response.
As such, the FBAA executive director urged for calm, saying: “I have never seen such craziness around our sector, and this is leading to reactionary comments rather than considered approaches.”
Mr White added that the industry has been undergoing a process of reform directly with the regulators for the past couple of years, all with the aim of achieving better consumer outcomes.
“There is not really a problem, but these multiple inquiries and statutory bodies have to justify their existence and fat pay packets by kicking someone, and at the moment, it’s finance brokers,” Mr White said.
“Let’s keep in mind that consumers are not complaining; we know they are happy with the current system because they are voting with their feet and overwhelmingly choosing brokers.”
Touching on commentary around flat-fee structures, the head of the FBAA added that ASIC’s own reviews indicated that a flat-fee structure replacing broker commissions would present an entirely new set of problems.
“Unfortunately, with all these voices being driven by self-interest, it’s easy to think something needs to change or be fixed when it doesn’t,” Mr White said.
“While the sound bites from the banks have raised some eyebrows, their submissions, except for one bank, to the royal commission indicate support for the current system, which isn’t surprising because it’s better for banks, brokers and borrowers.”
Mr White, therefore, urged for calm and for a “more rational and informed discussion”, advising brokers to avoid reactionary comments in case they are used “out of context”.
[Related: ‘No evidence’ that commissions result in poor customer outcomes]
