A broker group is calling on the treasurer to start a consultation with the broking industry before making any changes to remuneration.
Mortgage Choice CEO Susan Mitchell said brokers had just had their entire world changed without any consultation after the recommendations from Commissioner Hayne.
She said there was no right of reply to the royal commission and that the industry had concerns about the impact on consumers and competition if the changes were implemented without industry discussion.
The current government has said it will hold a review after trail commission is removed in July 2020 to assess the impact before deciding whether to remove upfront commission. But Mitchell said there needs to be discussion with the industry when it comes to removing trail as well.
She added that the industry was under unnecessary stress at the moment over the lack of clarity on broker remuneration plans.
She said, “I’m calling for confirmation from both sides of government that a consultation process will be instigated. This will at least give the broking industry comfort that our point of view will be heard.
“It is understandable that the Australian public want to see significant change in banking practices following the evidence given at the Banking Royal Commission hearings but the mortgage broker channel, which is both successful and popular with borrowers, is bearing the brunt.
“The same can be said for the smaller lenders that do not have a branch network, for whom brokers provide a shopfront.
“Looking ahead, I hope common sense prevails and the industry and both sides of federal politics can all work towards a level playing field for lenders and brokers. I believe this can best be achieved through consultation with the mortgage broking industry. Australian borrowers deserve nothing less.”
Concerned for Mortgage Choice customers, Mitchell said it was already hard enough for borrowers trying to afford a home.
“Adding more costs in the form of an upfront fee paid regardless of whether the customer goes to a broker, or directly to a lender, cannot possibly be a good outcome for consumers,” she added.
“Fees could also prove to be a disincentive for refinancing and switching to a better financial product if the interest savings don’t offset the switching costs.
“These changes will result in poor consumer outcomes, which is not in line with the original intentions of the banking royal commission.”