Banks, aggregators and the MFAA and the FBAA begin negotiations over the future of broker remuneration
Banks, aggregators and the MFAA and the FBAA begin negotiations over the future of broker remuneration
The mortgage industry’s leading bodies have initiated talks over the future of broker remuneration, following major reports by ASIC and Sedgwick.
The discussion forum, held last Friday, brought together the Australian Bankers Association, who sponsored Sedgwick’s Review, alongside broking’s industry associations and individual lenders, aggregators and brokers. Also present were non-banks and the Customer Owned Banking Association.
Whilst the forum produced no concrete outcomes, with participants mainly presentencing their own views, the ABA’s executive director of Retail Policy Diane Tate said it was, "an important step for the industry to work together on options for an industry based response to calls for changes in the mortgage industry.”
MFAA CEO Mike Felton said the forum proved “that our industry is serious about self-regulation” whilst the FBAA’s Peter White saw it as “a unique step forward” for the industry.
Small start on a big challenge
Whilst industry leaders were positive about the forum, the challenges involved in self-regulation are enormous.
Upon publication, the Sedgwick Review was criticised by industry associations, both of whom said they had not been adequately consulted by it. At the time, MFAA boss Felton said he was ‘frustrated’ with the Review, which: “in essence recommends a consolidation of power to lenders, giving them complete oversight of mortgage brokers.”
Brokers were further caught by surprise when all four major banks committed to the recommendations of the Sedgwick Review, on the day of its release. These recommendations went beyond ASIC’s proposals and included a decoupling of commissions from loan size.
Since then a number of non-major banks have agreed to the proposals, promising implementation by 2020 at the latest.
Too much consultation?
Along with the FBAA, the MFAA has criticised the Sedgwick Review for moving attention away from the Treasury’s official consultation process, to which associations and individuals can submit their views by the 30th of June.
The Treasury nor ASIC had minimal involvement in Friday’s forum, given the focus on self-regulation and so the forum can be seen as further distracting from the Treasury’s process.
No further forums will be held until after the submission deadline, however, and the forum’s participants have promised to work ‘in consultation with’ regulators.
MFAA CEO Mike Felton spoke to MPA about ASIC, Sedgwick and how the MFAA views the future of broker remuneration: https://www.mpamagazine.com.au/people/profiles/mike-felton-what-the-mfaa-is-doing-about-asic-235226.aspx
