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The head of a leading mortgage brokerage has said that cross-sector co-operation on broking has relieved his concerns about the future of the industry, noting that it is the “first time in 25 years” that the finance industry has come together for the broking sector.
Jason Back, managing director of The Australian Lending & Investment Centre (ALIC), told The Adviser that in July of this year, he was “very worried” about the future of the industry given the scrutiny of remuneration and increasing compliance, but that collaboration between different players in the finance industry has set his mind at ease.
Mr Back explained: “This year, the really interesting conversation piece has been around consultation. I have to admit that, back in July, I was really concerned about the future of our industry. The bigger companies would have survive, but for the average broker out there, I was very worried.
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“But I’m relived now. I’m much less concerned now, after speaking to senior members of aggregators, bank, industry bodies, etc., that they are actually working together. That’s the first time I've seen anything like this in 25 years for broking.”
Mr Back continued: “It took for APRA and ASIC to come in and say ‘get your shop in order and if you don’t we will come in and get it in order for you’. So, I enjoy the fact that, firstly, the market is being consulted on things and asked us what we thought about changes coming in. The other interesting thing that came out of it was the collaboration with [the Combined Industry Forum] and the collaboration with everyone from the ABA to the banks to industry bodies, aggregators and brokers.”
The ALIC managing director added: “There is a lot of self-interest in our industry and it’s always concerning that people might only be interested in putting their own interests forward and not worrying about the overall industry. But when I sit back and think about 2017, I think that it looks like enough people have come to their senses to realise that if we don’t behave well together than an independent party is going to come in and start regulating.
“So, it’s great that we now have the opportunity for us to get it right first. It’s the right thing to do and it’s the right outcome for our clients, and it’s great that the industry has come together to do that.”
The Combined Industry Forum’s response to ASIC’s review into remuneration has been submitted to government for consideration.
The forum is composed of the Australian Bankers’ Association (ABA), Finance Brokers Association of Australia (FBAA), the Mortgage & Finance Association of Australia (MFAA), the Customer Owned Banking Association (COBA), the Australian Finance Industry Association (AFIA) and unnamed “representatives from bank and non-bank lenders, aggregators and brokers” and consumer groups.
The group, which was brought together by the ABA and MFAA, aims to provide a coherent response to ASIC’s investigation of broker remuneration.
While details of the initial response to Treasury have not yet been released, it is believed that the response does not support any radical changes to broker remuneration.
The Minister for Revenue and Financial Services, Kelly O’Dwyer, has previously stated that the government would utilise industry feedback, including that from the CIF, in its response to the remuneration review, which is expected by the end of the year and with a final response coming in the new year.
