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The non-major bank has lodged a submission to Treasury as part of the consultation process for the proposed best interests duty, in which it has stressed its support for the “critical” broker channel.
The deadline for submissions in response to the Morrison government’s National Consumer Credit Protection Amendment (Mortgage Brokers) Bill 2019 has now passed.
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The draft bill contains a new bests interests duty obligation on mortgage brokers, as recommended by commissioner Kenneth Hayne in the final report of the banking royal commission. As an extension to the best interests duty, the bill builds on remuneration reforms proposed by the Combined Industry Forum.
The proposal also includes a provision to limit the period over which commissions can be clawed back to two years and prohibits the cost of clawbacks being passed on to consumers
In a statement to The Adviser, Sucnrop Bank has revealed that it has used the opportunity to lodge a submission to highlight the utility of the broker channel.
“Suncorp believes a viable and ethical mortgage broker channel is critical in driving stronger banking competition in Australia and providing greater consumer choice,” the bank noted.
The bank joined broking industry stakeholders in welcoming the new best interests duty provision, adding that it would further strengthen the broker proposition.
“We strongly support measures, such as a best interests duty, which provide continued customer confidence in mortgage brokers,” the bank added.
“[We] will continue to actively participate in discussions about how we can support a sustainable mortgage broker industry and deliver better outcomes for customers.”
Treasury is yet to publish the full cache of submissions. However, broking industry leaders have previously revealed that they would use the opportunity to lobby for reform to current remuneration arrangements.
Connective director Mark Haron noted the impact of contrasting remuneration policies adopted by the lenders off the back of the CIF’s move to limit the upfront commission paid to brokers to the amount drawn down by borrowers (net of offset).
Mr Haron said that some lenders had opted to withhold the payment of commission for additional funds arranged by a broker, which are utilised by a borrower after a pre-determined period post-settlement.
The Connective director added that the disparity in the application of the CIF reforms had increased risks of “lender choice conflicts”, which could hinder compliance with the newly proposed best interests duty.
Loan Market executive chairman Sam White also noted his concerns with existing net of offset arrangements.
Mr White called for an arrangement that better aligns with existing clawback provisions, which, under the federal government’s newly proposed bill, would limit the clawback period to two years.
The provisions of the bill are scheduled for implementation by 1 July 2020.
[Related: Final call: Best interests duty submissions due today]
