National aggregators and mortgage franchises have responded to recommendations by the Sedgwick Review into retail banking remuneration expressing some misgivings around the proposed changes.
Suggested changes to broker remuneration such as the lender flat fee structure mentioned in the report run contrary to ASIC’s proposal to merely tweak commissions, Mark Haron, director of Connective
, told Australian Broker
“A flat fee would have unintended consequences on customers who need the support and advice of a broker not necessarily getting it.”
As yet, Connective had not received any proposals from the lenders to move to a flat fee structure. Sedgwick had yet to approach the aggregators for consultation as well.
Since the core of the Sedgwick Review was focused on internal remuneration at the banks, broker commissions were just a side component which would be looked at in conjunction with the ASIC review, he said.
“Sedgwick nor the banks are the lawmakers. They’re part of the broader community and everyone needs to be consulted specifically in conjunction with the regulators to ensure that the right model and outcomes for consumers are implemented.”
The review is merely part of a debate about what changes need to be made with broker remuneration to minimise conflict of interest and drive good customer outcomes, he said.
, interim CEO of Australian Finance Group
(AFG), said suggestions relating to the third party channel were the view of a single stakeholder, providing additional commentary that feeds into a broader industry discussion.
“Ultimately the broker remuneration reforms being discussed should be the remit of the broader industry when addressing the proposals contained in the recently released ASIC Broker Remuneration Report,” he told Australian Broker
It was pleasing to see Sedgwick reinforcing the value that mortgage brokers delivered to competition in the lending market, he added.
“The mortgage broking industry plays a critical role in maintaining a broad choice of lenders by acting as a distribution channel for lenders without a branch network. Disincentives to competition increase the risk that the lending market won’t provide for all Australians; for many rural and regional Australians, mortgage brokers are the only ones in their local communities.”
John Flavell, CEO of Mortgage Choice
, told Australian Broker
that the Sedgwick Review was long on anecdote and short on facts.
“It is not the brokers or the Australian Bankers Association’s role to tell regulators what to do, or what changes need to be made,” he said.
Aussie Home Loans
declined to comment on the review when contacted by Australian Broker
Sedgwick shoots down commissions linked to loan size
MFAA pushes for balanced, fair & equitable commission structure
ASIC voices concerns over broker commission model