White label mortgage products may also come under the microscope in ASIC’s forthcoming review into remuneration structures in mortgage broking, the chief executive of the Finance Broker Association of Australia (FBAA) has claimed.
In the government’s response to the Murray Financial System Inquiry (FSI), the Treasury said it plans to address misaligned remuneration incentives by “reducing and improving the disclosure of conflicted remuneration in life insurance, stockbroking and mortgage broking.”
More specifically, the government said it will task ASIC with reviewing remuneration structures in the mortgage broking industry by the end of 2016.
The remuneration review is also likely to extend to white labelling too, according to Peter White
, the CEO of the FBAA, who met with the assistant treasurer and minister for small business, Kelly O’Dwyer this week.
“It is not just about remuneration and ownership considerations but it is also how it impacts on white label products that might be provided by that bank that is investing in the business,” White told Australian Broker
“They are looking at the commission structures in the industry and how that also interplays with transparency of ownership. For example, if you have a mortgage network owned by CBA
and their white label product is provided by CBA
, if there is an imbalance in commissions because of that you could see how they would have a concern from an ASIC level that there may be an incentive to provide a white label product over anther product if it is paying more commission.”
“[Kelly O’Dwyer and I] had a discussion about that, especially when it is very public that commission is being looked at, so when you run the two together then that is a logical step and the logical thing to be looked at.”