The Treasury makes public bank submissions as Kelly O’Dwyer endorses industry self-regulation
The Treasury makes public bank submissions as Kelly O’Dwyer endorses industry self-regulation
Bank views on mortgage broker commissions were revealed late yesterday by the Treasury.
The 35 submissions by major banks, aggregators, industry associations and consumer groups, were official responses to ASIC’s Review of Mortgage Broker Remuneration, published in March this year.
Tuesday also saw the Minister for Revenue and Financial Services Kelly O’Dwyer appear to give self-regulation the go-ahead, stating: “I welcome the proactive steps taken by the mortgage industry forum to engage with the Government and consumer stakeholders on the issue of mortgage broker remuneration.”
MFAA CEO Mike Felton welcomed O’Dwyer’s stance: "we believe this is a strong endorsement of the Combined Industry Forum and process we are currently undertaking as an industry and we look forward to keeping you informed of our progress."
The Combined Industry Forum, which has met twice so far, is spearheaded by the MFAA, FBAA, ABA and COBA, although it has so far been closed to the public.
NAB and Westpac’s submissions
The submissions of NAB and Westpac were made public by ASIC.
NAB recently argued for upfront commissions to be based on drawn down amount and net of offset balances and this was reflected in their submission. However, the submission also included a suggestion that “there is the potential to attach other key performance indicators (KPIs) to the payment of trail commission going forward. These could include evidence of good quality ‘preliminary assessments’ and, where appropriate, ongoing service being provided to the customer.”
Westpac did not appear to back any new approach to commission, instead pointing towards its work with the combined industry forum. Westpac, alongside NAB, criticised ASIC’s proposal to link commissions to LVRs, saying this would be “highly complex and would not necessarily result in better consumer outcomes.”
Where are ANZ and CBA?
Conspicuous in their absence, the views of the other two major banks remain unknown.
Of the 35 submissions to the Treasury, nine were not made public and it is possible ANZ and CBA’s submissions are among those. However, a spokesperson from CBA told MPA that the bank had made its views known through the Australian Bankers Association’s submission. ANZ had not responded to MPA by the time of publication.
The ABA’s submission, which was made public, is brief and mainly focuses on ASIC’s plans for disclosing ownership structures and public reporting.
Whilst the ABA’s own Sedgwick Review proposed major changes to commissions, the ABA’s submission was vague about whether these would be enacted: “the banking industry is also considering options for an aligned process to respond to parts of the Sedgwick Review recommendations on third party payments where there are practical and consumer benefits from doing so, and subject to any necessary regulatory approval.”
We'll be looking in more detail at the submissions of the banks and other groups over coming days in our e-newsletter
