Industry slams RBA commission claims

“The more banks use brokers, the greater is the risk that a misaligned broker incentive structure would generate significant amounts of lending that is outside their risk tolerance or is otherwise inappropriate,” it said.

Speaking to The Adviser, Vow Financial chief executive Tim Brown said the RBA should either “put up” its evidence or “shut up”.

“In other words, show us the evidence or don’t make comment,” Mr Brown said.

“Speculative comments like this does neither party any good and it is about time the RBA come to us and got the real information.

“My experience as a lender and an aggregator is that the quality of the loan books of brokers tends to be of a higher and much more significant quality of client than what is attracted through the proprietary channel.”

Mr Brown argued that it is not in a broker’s interest to put clients into loans that they can’t afford or shouldn’t be in.

Commenting on the RBA’s remarks about “misaligned broker incentive” structures, Mr Brown said incentives around commission rates for mortgage brokers are no different to any other industry.

“It’s just a natural occurrence of the market,” he said. “Brokers won’t be influenced by commissions. They will be influenced by service and quality of product.”

One broker commented on The Adviser that “incentives to brokers need to be disclosed to clients under NCCP". 

“Banks run their own business – not the RBA. If lenders are under so much risk, why would they be so aggressive with their appetite to lend?”

Another broker said: "Now is the time for the MFAA and FBAA to stand up and represent brokers interests and make sure the RBA understands that brokers perform a worthwhile service for their clients – both borrowers and lenders.

“We earn and deserve every dollar we are paid. We have already suffered reduced commissions since the GFC despite the banks and lenders margins being higher now than they were then, in most cases.”

MFAA chief executive Siobhan Hayden said she was "very disappointed" about the comments made by the Reserve Bank.

"It once again demonstrates a blatant misunderstanding by key regulatory bodies who should have a greater depth of understanding of the stakeholders under their remit," Ms Hayden said.

"I will be seeking to discuss this further with them on behalf of the industry."

[Related: MFAA slams APRA over broker commissions]