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Leaders from the mortgage broking industry have welcomed the news that the Labor Party would not seek to change broker remuneration.
Last week, the shadow assistant treasurer and shadow minister for financial services and superannuation, Stephen Jones MP, confirmed to The Adviser that the Australian Labor Party had no intentions of changing the current broker remuneration structure.
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The comments from the Labor MP are pertinent given the upcoming federal election (expected to be held in May) as they clarify the Labor Party’s positioning on broker remuneration.
Comments provide ‘confidence’ to industry
Both the Finance Brokers Association of Australia (FBAA) and Mortgage & Finance Association of Australia (MFAA) have told The Adviser that while they were not surprised by the news, they applauded the shadow minister for making the party’s position publicly known as it meant that the broking industry could now move forward with “confidence”.
The managing director of the FBAA, Peter White, welcomed the opposition’s willingness to engage with industry and particularly thanked the shadow assistant treasurer for his “acknowledgment that commissioner Kenneth Hayne got it wrong by recommending the industry moves to a consumer-pays model”.
Mr White said: “This now means that our industry can move forward with confidence, knowing that irrespective of which major party wins government at the next election, we have security.
“It also means brokers won’t be forced to vote for one side or the other based on this important issue.
“There have been enough political and regulatory inquiries into our industry and the results always show how important brokers are to Australian borrowers and how well the current model of remuneration works.
“It’s time for MPs, regulators and lenders to accept this and work together to ensure the mortgage sector remains competitive.”
MFAA chief executive Mike Felton told The Adviser: “We believe it is entirely appropriate for all sides of politics to clarify their position on broker remuneration prior to an election, given the systemic importance of the mortgage broker channel to the home lending market, and indeed, the Australian economy...
“For many years in the lead-up to the royal commission, our industry had implemented a series of strong self-regulatory reforms to mortgage broker remuneration structures, and since the royal commission, there have been further legislative changes and other reforms,” he flagged, citing the Best Interests Duty as well as changes around conflicted remuneration (net of offset), and a swathe of information sharing and misconduct reporting rules brought in last year.”
Mr Felton said that, when coupled with “unrelenting dedication” to customers, these reforms had helped drive record market share for the broking industry.
“The mortgage broking sector has never been stronger, nor more professional. Brokers maintain competition and provide access to more than 100 lenders for millions of Australian consumers. The competition underpinned by the broker channel helps keep prices low for all Australian home buyers, regardless of whether they use a broker,” the MFAA CEO added.
Noting that the Morrison government has pledged to review broker remuneration later this year, Mr Felton commented: “[U]nlike the royal commission, any case for change put forward by this review must be backed with data, and the data our industry is producing is exceptionally strong.”
The leaders of several of the major aggregators have also applauded the shadow finance minister’s comments, and can be read here.
[Related: Aggregator heads welcome Labor's commitment to the status quo]
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