Australia’s vote backs brokers

by Melanie Mingas18 May 2019

The full ban on trail commission payments for mortgage brokers, as recommended by Commissioner Hayne, has been ruled out following the Coalition's election win.

Liberal party leader Scott Morrison confirmed the news in a Sydney press conference that followed a tense 37-day campaign period.

The results are a positive outcome for the third party channel.

The Liberal-led coalition government was the first to give assurances on broker remuneration and fees for service, assuring Australians that it would protect competition, consumers and property owners, as well as the brokers who work for them.

PM Scott Morrison and Treasurer Josh Frydenberg made several commitments to mortgage brokers, in letters, speeches and meetings with industry groups.

Most recently, Morrison wrote a letter highlighting how his government had engaged with brokers before deciding not to prohibit trails, and promising to revisit the issue in three years’ time.

“Unlike Labor, we support you and your industry. We will continue to advocate for you and the interests of the consumers you serve so well,” the letter stated.

It took Labor 18 days to confirm its position on remuneration after Commissioner Hayne delivered the final report.

In a statement released at the end of February, the party said: “Labor will abolish trail commissions from lenders to mortgage brokers and aggregators on new loans from 1 July 2020 as well as banning volume-based commissions and ‘soft dollar’ payments being offered to brokers by lenders.”

The policies

In contrast to Labor, the Liberal’s policies on property are widely expected to spur a much-needed uptick in market performance in the second half of the year. 

Morrison most recently pledged his commitment to the $500m First Home Buyers scheme, which allows eligible FHBs to buy with only a 5% deposit rather than the standard 20%. Labor also pledged to back the scheme.

Small and mid-sized businesses will also receive a boost under the Liberals. Morrison promised that, if re-elected, he would cut taxes from 30% to 27.5% for small businesses earning less than $50m. He also provided assurances that the rate will be lowered further to 25%, although no timeline has been provided.

The party plans to extend instant asset write-offs to $30,000, with additional promises to help cash flow and provide better access to finance. Morrison has also pledged to create 250,000 new small and family businesses over the next five years.

In the Coalition’s 2019 Federal Budget, widespread tax cuts topped the fiscal agenda, while infrastructure spending, support for small business and relief for the agriculture industry, all featured heavily.

There will be more on this story next week.