Mortgage industry veteran and managing director of MoneyQuest, Michael Russell, has labelled recent comparisons with the UK mortgage market “incredibly misleading”.
Speaking at the FBAA
National Tour last week, the former CEO of Mortgages at Barclays in the UK, Steve Weston, spoke about the major differences between the broker markets in Australia and the UK
According to Weston, Australia is one of the last markets in the world to pay trail commissions to mortgage brokers. Because of this, he said it is a reasonable assumption to say ASIC will be questioning this.
“The other big, big difference is on remuneration – and that is something we should be concerned about with ASIC because regulators will speak to their international counterparts,” Weston told brokers.
However, Russell said comparing the Australian mortgage market with its overseas counterparts – particularly the UK and the US – is misleading.
“Talk of commissions being at a cliff edge are completely unfounded, particularly when ASIC itself has said on more than one occasion it is going into the review without any pre-conceived views,” Russell said.
“Furthermore, recent comparisons with the UK and US markets have been incredibly misleading and I really hope that Australian mortgage brokers haven’t been lulled into thinking we are destined to go down the same path.
“The Australian mortgage market is almost the polar opposite to that operating in the UK and US. While fixed rates, short loan lives and churn are the norm in these markets, here variable rates, longer loan lives and effectively zero churn are our foundation.”
According to Russell, much of the commentary surrounding ASIC’s remuneration review of mortgage broking is “sensationalised”.
“Much of the commentary in recent weeks has been very disappointing and clearly designed to sensationalise what we in the industry, always knew was inevitable,” he said.
“There’s certainly no reason to get caught up in the sensationalism but rather as an industry we need to remain calm and very confident in the standards we now work to.”
He said the changes to come from the review will be “measured”, and brokers have nothing to be concerned about.
“Finally, while we fully expect to see some remuneration changes to come from the review, we are very confident they will be measured and implemented in full consultation with both the industry and customers best outcomes at heart.”