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Mortgage brokers provide an “extremely valuable service” that “should be properly remunerated”, according to former treasurer Peter Costello.
Australia’s former and longest serving treasurer, Peter Costello (serving 1996-2007), has praised the “important” role that brokers play in the “financial architecture” of Australia.
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Speaking at the (delayed) 2021 Connective Conference in the Sunshine Coast last week, the former treasurer and former Liberal Party member has provided Connective brokers with an overview of how he felt the economy was faring, and what he thought would influence house prices and the cash rate moving forward.
Following his speech, Mr Costello was asked by broker delegates for his thoughts on the upcoming broker remuneration review and what he thought the outcome would be of such a review.
Mr Costello responded: “I’m not close enough to know what the outcome is going to be. I haven’t followed it very carefully. I think it will probably depend a bit on who wins the election.
“I think that brokers are an important part of the financial architecture now. The way I see it, basically, the banks are outsourcing credit assessment, dealing with clients... and this has given the opportunity for the brokers to come into what bankers were essentially doing 30 years ago. And it’s a very valuable service, an extremely valuable service and it should be properly remunerated.
“If you think about it this way, what’s the biggest investment a person will ever make in their lives? It’s their home. And this is where they deserve, in my view, impartial, good advice. If it’s going to be governing their finances for 20 or 30 years, it’s extremely valuable service.”
The former treasurer added that he had great respect for brokers, noting they were generally self-employed business owners, adding: “Nobody gives you any business; you’ve got to go out and you’ve got to get it yourself. And nobody gives you any support; you’ve got to file your BAS [statements] yourself, and you’ve got to pay all those taxes and it’s very, very hard. And I really admire you for doing it. Well done.”
The issue of broker remuneration has been brought back into focus given the upcoming federal election. It remains one of the industry’s key election concerns following the recommendation from the banking royal commission to move brokers from a lender-paid commission structure to a consumer-pays model.
The Morrison government has said it would look to review broker remuneration later this year to consider whether any changes are necessary, while the Labor Party has said it would not look to change the current structure should it gain power.
[Related: Economy and broker remuneration top industry’s election concerns]
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