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Brokers breathed a sigh of relief when the Coalition was re-elected by the Australian public, knowing that their remuneration is secure for the next three years. The Adviser asked the industry what they would like to see from the returned government.
Speaking to The Adviser, Lee Rosenfeld, director at Innovative Home Loans, said he would like the returned government to reconsider two-year clawback policies on mortgages, explaining that brokers should not be penalised if their clients’ personal circumstances change.
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“I don’t agree with the two-year clawback policy that they’re looking to introduce. People can make significant life decisions in that time,” Mr Rosenfeld said.
“As a broker, you work your butt off to help the client get a good deal, and you finally get paid for the work up to three months later. If the client then decides to sell, we lose our income.
“There’s no other industry that I can think of where [businesses] lose the income they make in two years.
Meanwhile, Jillian Clifford, a Smartline mortgage broker, said she would like clarity on what the best interests duty for mortgage brokers will require, as well as which aspects of the current broker remuneration model will be reviewed in three years.
“We would now like to see this support confirmed by the establishment of some clear parameters regarding the changes to come – in particular, clarification of what the best interests duty could involve, and what aspects of remuneration will be under review,” Ms Clifford said.
“If the best interests duty becomes purely a red tape exercise, or if [commissioner Kenneth] Hayne’s remuneration changes will be reconsidered come 2022, it will not serve consumers or brokers well. It is difficult for the industry to grow amid this kind of uncertainty.”
Tada Souvannavong, partner at Iconic Financial Services, expressed similar views, calling for further details to be provided on the proposed best interests duty, especially how it would play out for brokers and bankers, as well as the impending remuneration review.
“They said they’re going to [revisit] trail in three years’ time, which will be interesting. It’s important that we have clarity around whether they're going to review the whole system or whether they’re just doing a health check to see if the remuneration model [we operate under] is appropriate for the industry,” Mr Souvannavong said.
“While it’s good that we've got that window of time in which we know that they’re not going to change anything [in relation to broker remuneration] in the next three years, it’s important as well to get an understanding of what the process is going to be in three years’ time.”
For Ashleigh Patterson, finance specialist at Momentum Wealth, it’s important that the government engages in more consultation with industry bodies such as the Mortgage & Finance Association of Australia and the Finance Brokers Association of Australia before deciding on changes that could significantly impact brokers.
Providing a similar suggestion, Mr Rosenfeld said the government should work with the industry to gain a much better understanding of what brokers do on a daily basis before reviewing their remuneration model in three years.
“They may come to the conclusion that they don’t need to conduct a [microscopic] review, that the industry is solid,” the Innovative Home Loans director said.
Ms Patterson additionally called for recognition of the “differing needs of individual markets and states before enforcing blanket approaches to lending policies”.
“I believe a more individualised approach and greater communication between the government and industry bodies would enable us to better serve our clients through industry changes,” she concluded.
