A mortgage group has responded to the Royal Commission interim report calling it “disappointing” and “misguided”.
Connective’s Daniel Oh said Commissioner Hayne had only used parts of submissions to make his findings, which has “overlooked” the evidence of how mortgage brokers benefit consumers.
He said, “Commissioner Hayne’s interim report contained some disappointing, and in my view, misguided narrative.
“His remarks about the industry’s failings and misconduct being motivated entirely by “greed and remuneration driven behaviour” may not have been directed at mortgage brokers specifically, but were nevertheless unfair and misinformed from our viewpoint.”
Oh’s “biggest concern” was the commentary on broker remuneration, including the assertion that home loans arranged by brokers on average had high loan to value ratios, incurred higher arrears and were larger.
Other associations have also taken issue with the statement, arguing that the commission should have looked at the type of customers using the broker channel.
The data showing broker levels of high loan to value ratios and higher arrears came from the ASIC Remuneration Review.
Oh said it was interesting to note that ASIC’s review had deemed the commission model fine subject to refinement, but that Hayne could believe it was evidence it needed to be changed.
He added it was particularly disappointing considering the Combined Industry Forum was already working on the model.
He said the CIF’s recommendations should suffice and as suggested in the ASIC Remuneration Review, ASIC should re-examine the market data in a couple of years to assess the impact.
He added, “We expect Commissioner Hayne will continue his narrative that the misconduct displayed in the case studies he has reviewed during the Royal Commission have all been motivated by greed – the pursuit of short term profit at the expense of basic standards of honesty.
“However, we are hopeful that the submissions of Connective and others in the industry, including the MFAA, FBAA and Combined Industry Forum, will help convince Commissioner Hayne that although there may be potential conflicts from value-based remuneration structures, the industry is already focused on improving through self-regulation.”