Westpac CEO Brian Hartzer has suggested brokers could start charging customers directly.
Speaking at the Australian Financial Review Banking and Wealth Summit (5 April) he said there needed to be more transparency around broker commissions and fees, but this was not just a job for the lenders.
Hartzer said customers needed to know what they were signing up for, as well as reduce the conflict of interest currently being questioned as part of the Royal Commission. In his speech he said that “brokers, auto dealers, non-bank financiers, financial planning firms, insurance companies, superannuation funds, and the regulators” all had to work together with the banks for greater transparency.
Before tackling the subject of mortgage brokers directly, Hartzer said that hearing the cases and criticisms during the Royal Commission had been “very uncomfortable and confronting to hear”.
He added: “In mortgage broking, increased transparency around broker commissions, fees and costs would help consumers to make more informed choices. One option that could be considered would be for brokers to charge customers directly for their services, although the consequences of such a change for all stakeholders would need to be considered carefully.”
Also picking up on other areas which need reform, he said that payments and commission structures in auto finance had to change. He then acknowledged the issue of it being ‘not possible’ for banks to achieve good results while delivering good customer outcomes, suggesting they need to start trading off profits for customer satisfaction.
Another criticism which has been common throughout the Royal Commission is the lack of competition between the four major lenders.
Chairman of the Australian Competition and Consumer Commission Rod Sims also spoke at the two-day summit and said: “Their behaviour more resembles synchronised swimming than it does vigorous competition.”