Consumer groups welcome CIF reforms

by Miklos Bolza12 Dec 2017
New steps to reform mortgage broker remuneration and governance have been welcomed by several major consumer groups.

In a joint statement released yesterday (11 December), CHOICE, Consumer Action, the Financial Rights Legal Centre and Financial Counselling Australia welcomed the announcement by the Combined Industry Forum (CIF) that six principles had been forwarded to the Treasury in response to the ASIC broker remuneration review.

The move was a positive step from mortgage brokers, aggregators and lenders towards ensuring that the industry acts in customer interests, said CHOICE director of campaigns and communications Erin Turner.

“We are pleased that industry will continue to develop and implement reforms over 2018 and work towards an enforceable ASIC-registered code. This is a meaningful commitment that, when achieved, will set the mortgage broking sector apart from other segments of the financial services industry.”

The reforms show that all parties in the industry have taken the ASIC report into broker remuneration very seriously, she said.

“The changes should lead to a greater degree of transparency.”

She praised how the Forum’s principles will provide consumers with greater access to information, such as the number of lenders a broker has used in the previous year and the percentage of business that broker wrote to their top six lenders.

However, Turner called on the mortgage industry to continue its evolution to put consumer interests first.

“We are disappointed that brokers aren’t required to act in the best interests of consumers and that there are few changes to overall commission structures.”

There was no clarity around the benefit of trail commissions, she added, including around what services customers will be guaranteed to receive over the life of the loan as a result of trail.

“Consumer groups will continue to discuss these reforms with industry and look forward to their implementation.”

Related stories:

CIF releases broker remuneration reforms

ACCC urged to look into IO rate repricing

APRA highlights slowdown in high risk lending