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Hejaz Financial Services has announced that it will be abolishing all clawbacks on Hejaz home lending products, effective immediately.
The provider of Islamic financial products and services has announced that it will no longer clawback brokers on loans that terminate.
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Hejaz outlined that it believes the idea that a lender can clawback commissions if a loan terminates (during a set time period) is “unethical”.
It added that it “long believed” that mortgage brokers should be “rewarded for the considerable time, effort and energy” they put into sourcing clients and writing loans.
The Islamic finance provider noted that brokers were having to contend with a “turbulent” legislative landscape, while at the same time suffering from the rising cost of living, interest rate hikes and broader economic volatility.
It suggested that it is “particularly unjustified” for brokers to be penalised for terminated home loans “due to an unforeseen client life event”.
The chief operating officer of Hejaz, Muzzammil Dhedhy, stated its brokers were the company’s “most important asset” and were helping Australian Muslims achieve the “Australian dream of home ownership without compromising their values”.
“We have put an emphasis on recruiting and training intermediaries because this customer base is growing and brokers should be equipped with the knowledge to best serve their clients’ interests,” he said.
“We believe there is no substitute for the hard work they can provide to clients, so we have taken this industry-leading step to show them we have their backs,” Mr Dhedhy said.
Mr Dhedhy further stated: “Islamic finance is, at its heart, about transparency, ethics and fairness.
“We have long believed that clawbacks are unethical and so we have abolished them because we want to apply our principles not just to our products but to the way we work and conduct ourselves.”
Finsure CEO Simon Bednar supported the lender’s announcement, stating: “Finsure applauds the recent announcement by Hejaz Financial Services to abolish clawbacks.”
Mr Bednar reiterated statements he made earlier this year, suggesting that clawbacks are now “unjustified”.
“Finsure has always stated that clawbacks are at odds with the best interest duty (BID) regulations, which require finance brokers to act in the best interests of their customers and are no longer relevant for the industry.
“By removing clawbacks, Hejaz is clearly recognising that brokers do the work, and if they carry out their obligations under BID they should be rewarded, not penalised,” Mr Bednar said.
Hejaz became Finsure’s first Islamic finance provider listed on the aggregator’s platform in March 2021.
It has reportedly recently accredited its 1,000th mortgage broker.
[RELATED: Clawbacks clash with best interests duty: Finsure]
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