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The Assistant Treasurer and Financial Services Minister Stephen Jones MP has met with members of the broking industry to discuss clawback and net-of-offset commissions.
Following more than two years of discussions between the Finance Brokers Association of Australia (FBAA) and the federal government about the “unfair clawback” structure and net-of-offset commission structures impacting broker incomes, a meeting took place yesterday (8 July) between Minister Jones and members of the FBAA to tackle the matter.
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Minister Jones met with FBAA managing director Peter White AM, aggregators, and leading FBAA finance brokers from across Australia at the FBAA national office in Queensland on Monday to hear firsthand accounts of how the structure of clawbacks and net-of-offsets were impacting brokers.
As well as discussing the impacts of clawbacks and net-of-offsets on broker incomes, the FBAA members also discussed Consumer Data Right priorities and outcomes, Treasury’s engagements on lender settlement repricing 24 hours from settlements, front book and back book pricing differentials, and other mortgage industry challenges.
While the minister has not outlined any actions from the meeting, he has reportedly asked the FBAA to put together a list of top priorities and outcomes they want to see brought about.
White said that the association would now put together “a strategic list of actions and outcomes on these matters and other issues that will drive much-needed change and bring fairness to brokers”.
According to White, the meeting marked “the first time the industry at large had ever met with a relevant federal minister to specifically discuss clawbacks and other important issues at such depth”.
Minister Jones had pledged to discuss clawback with the FBAA while the Labor Party was still in opposition and previously said he would be interested to understand whether banks were profiting from clawback and had previously committed to having a conversation around reviewing clawbacks with the consideration to limiting them to one year.
Further, at a meeting last year, the FBAA had put forward submissions and data to Jones and federal Treasurer Jim Chalmers MP and hosted a meeting with Finance Minister Katy Gallagher.
The submissions at that time were regarding clawbacks, net-of-offset commission payments, APRA buffer rates, bank practices to entice new borrowers, and the need to better define broker eligibility for best interests duty, according to White.
Speaking of the meeting, White said the previous two years of work had resulted in the federal minister meeting on Monday.
He said: “This week, we had open and frank conversations around getting a fairer deal for brokers on clawbacks and net of offset commissions.
“It was an extraordinary privilege to have the minister come to our office in Queensland and meet with leaders in broking and the FBAA.”
He said that the meeting was “significant” given that around 75 per cent of the finance and mortgage broking sector was represented in the room (with around 95 per cent offering support, including “a couple of aggregators who couldn’t make it”).
[Related: Do banks profit from clawback? Assistant Treasurer asks]
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