The Australian Securities and Investments Commission (ASIC) has finally made its long awaited report into mortgage broker remuneration public.
In the report, the regulator makes six different proposals to alter broker commissions and incentives in order to “improve consumer outcomes and competition in the home loan market”. These include
- Changing the standard commission model to reduce the risk of poor consumer outcomes
- Moving away from bonus commissions and bonus payments which increase the risk of poor consumer outcomes
- Moving away from soft dollar benefits which increase the risk of poor consumer outcomes and can undermine competition
- Clearer disclosure of ownership structures within the home loan market to improve competition
- Establishing a new public reporting regime of consumer outcomes and competition in the home loan market
- Improving the oversight of brokers by lenders and aggregators
ASIC recommended that these proposals be implemented before a further review of the market is conducted in three to four years’ time. This second review would determine whether additional changes were required.
The regulator also proposed an additional targeted review of the suitability of advice provided by brokers including a “shadow shopping exercise” which will commence this year.
The Office of Kelly O'Dwyer has opened up the report for public consultation
and has encouraged interested parties to make a submission.
“It is important that industry have the opportunity to fully consider ASIC’s report and provide feedback to Treasury as part of a three month consultation process,” the Minister for Revenue and Financial Services, Kelly O’Dwyer, said.
More to come.