From Mortgage Professional Australia.
AFG, Connective, Aussie, Mortgage Choice, Loan Market, Smartline and Specialist Finance Group made submissions in response to ASIC
Aggregators and franchise groups have near-unanimously criticised changes to commissions in their submissions to the Treasury.
Three wholesale aggregators and four franchise groups, representing thousands of brokers, were responding to ASIC’s Review of Mortgage Broker Remuneration, published in March this year.
Connective’s submission summed up the general mood, stating: “the review seems to abandon the existing responsible lending framework, instead seeking to solve a poorly defined problem with an impossible to implement solution.”
Most aggregators rejected all alternative commission arrangements, giving reasons similar to Mortgage Choice’s argument: “to suggest that it would be effective to change the shape or quantum of broker commissions based on LVR, interest-only or lower loan amounts would not be correct. Broker economics need to line up with lender economics and consumer outcomes.”
NAB’s submission proposed upfront commission be linked to the drawn down amount, but only Smartline tentatively endorsed this approach, saying it “may make sense”.
Backing the MFAA, attacking the ABA
In their submissions, aggregators overwhelmingly backed the MFAA and industry self-regulation, which was endorsed yesterday by Minister Kelly O’Dywer.
Aussie and Loan Market pointed to the MFAA’s submission as reflecting their views, with the former noting “[Aussie] believes that potential changes that introduce unreasonable levels of complexity or inconsistency should be avoided. It will, therefore, be necessary to achieve industry consensus on any proposed actions before changes are implemented.”
Aggregators also attacked the Australian Bankers Association and its Sedgwick Review of commissions, with Smartline stating that “it concerns us that the ASIC report references the ABA report, which in our view was manifestly inadequate, lacking in substantive evidence to support recommendations, while being commissioned by a representative group with significant vested interests”
What about bank-owned aggregators?
Choice Aggregation, FAST and Plan Australia were represented within NAB’s submission to the Treasury which proposes major changes to commissions.
Bank ownership did not, however, appear to have an impact elsewhere. Aussie, which as of last week is 100% owned by CBA, was highly critical of changes to commissions.
Connective, which is part-owned by Macquarie, agreed with ASIC that controlling ownership interests should be disclosed to customers, whilst Mortgage Choice, which is ASX-listed, asked for further guidance on what constitutes a controlling interest.
Neither VOW nor Yellow Brick Road were listed among submissions to the Treasury, although it is possible they made anonymous submissions or submissions through the MFAA or FBAA.
