An industry association has hit out at a campaign which calls for the abolition of broker commissions.
Consumer advice group CHOICE published a release calling for the change to remuneration as well as the introduction of a ‘best interest’ duty to ensure customers get the best deal.
The group took issue with brokers being required to find a ‘not unsuitable’ home loan, saying brokers should be held to a higher standard. This is something the Combined Industry Forum (CIF) has already been working on.
The campaign also questions who brokers are working for and whether brokers are meeting their promises to customers.
It also points to the 2017 ASIC review and said brokers do not promote competition or get better prices.
The Finance Brokers Association of Australia (FBAA) has labelled the campaign as ill-informed and diametrically opposed to their stated motivation of getting consumers the best deal on mortgages.
FBAA managing director Peter White said he was amazed that any reputable organisation would call for consumers to pay up-front fees for broking services when that would simply drive more people to banks.
He pointed out the interim findings of the royal commission said banks are driven by ‘greed - the pursuit of short- term profit at the expense of basic standards of honesty’.
“Brokers are transparent about their commissions and they are driven to achieve the best product for the consumer,” he said.
“The commissions paid to brokers from lender to lender have a negligible difference so it’s ridiculous to suggest the existing commission structure works against consumers.”
White also pointed to the recent ACCC report which concluded that banks use their lack of transparency to stifle competition and make extra profit from customers.
“Informed commentators understand the role that mortgage brokers play in the financial services industry in this country and they know that consumers get the best deal from a broker who understands their situation and responds accordingly,” White concluded.