The corporate regulator itself has commended the head of the MFAA for “quite rightly” highlighting the differences in commission structures between the mortgage broking and financial planning industries.
Speaking at the MFAA’s Broker 2020 Series held in Sydney on Friday, ASIC senior manager, deposit takers, credit and insurers, Kevin Foo, told brokers Siobhan Hayden rightly corrected the Australian Financial Review
) after it published a column claiming standards in the mortgage broking industry continue to lag those being imposed on financial planners.
“While we have said it previously and I have been asked to say it again, ASIC has no preconceptions as to the outcome [of the remuneration review] and there is no hidden agenda. Government and regulators have previously considered remuneration in other contexts, such as financial advice and insurance, and there are significant differences between the commission structures of financial planners and those of mortgage brokers.
“Your CEO, Siobhan Hayden, came out and quite rightly pointed out to the AFR the differences in remuneration between the two industries.”
Nonetheless, Foo said it is important to understand the remuneration practices and structures in any sector, as they are often key drivers of behaviour and culture.
“The press is always going to say what the press is going to say. ASIC bashing is what the press does as well.
“We don’t know where this review is heading, it is a fact find. We have simply been asked by government to pull the information together so they can make a decision,” Foo said.
Defending the integrity of the mortgage broking sector against the claims made by the AFR
, Hayden pointed to two “clear differences” between the remuneration structures of both industries.
“There are clear differences between the remuneration structures in mortgage broking and those in the financial planning and life insurance industries. Crucially, brokers are paid commissions by lenders; they are not paid by consumers. Commissions are also variable and reflect the cost of a mortgage,” Hayden said, as reported in Australian Broker