The House of Representatives standing committee on economics questioning the logic of overhauling the current broker remuneration model has been welcomed as reassuring and validating by the head of an aggregator group.
Connective director Mark Haron said, “Recognition from the committee that Hayne’s recommendation to adjust the broker remuneration model, particularly regarding trailing commissions, has missed the mark is encouraging.
“The revelations validate the government’s decision not to immediately implement this particular recommendation from Hayne, [as well as] the industry’s tireless work to educate policymakers and Australians on the value of brokers and the potential impact of the recommended changes on choice in the market.”
According to Haron, Connective has always “unequivocally rejected” proposed changes to the current remuneration model as it is not a broken system.
“It’s important to remember that regulators, government bodies and most consumer experiences all conclude there is absolutely no systemic misconduct in the mortgage broker industry,” he said.
"In fact, we’ve continued to see incredible strides over the last 12-months from the mortgage broking industry toward self-regulation, transparency, compliance and a strong will to achieve the best outcomes for customers.”
Haron highlighted how the industry rallied behind ASIC’s finalised Best Interest Duty guidance released last month, as many brokers have already applied the practices outlined from well before the royal commission – and plan to continue to improve still.
“Quite frankly, removing trail commissions will only add to diminishing competition in the home-lending industry,” the aggregator head added.
“Having access to a mortgage broker who provides the support to ensure customers remain with the most appropriate product for them, over time, is valuable and trail commissions allow for this support in the ever-increasing complexity of Australia’s home lending market.
“Connective will continue to educate and advocate for brokers when it comes to mortgage broker remuneration,” concluded Haron.