The chief executive of one of the broking industry’s peak bodies has held discussions with the Assistant Treasurer concerning “unjust” clawbacks.
In a statement yesterday, FBAA chief executive Peter White described discussions with Assistant Treasurer Kelly O'Dwyer concerning “unjust commission clawbacks” in the broking industry as "fruitful".
Following his promise to lobby the government on this sensitive issue, Mr White spent Monday morning with Ms O’Dwyer discussing the lack of fairness in commission clawbacks, which he said continues to drive a wedge between brokers and lenders.
“You can call me the proverbial dog with a bone on this issue but I will not let it rest,” he said.
“I outlined the FBAA’s concerns to Minister O’Dwyer about the unfairness of ‘non-contract-breach’ clawbacks and discussed ways to resolve the inequity of broker clawbacks.”
Mr White stressed that brokers suffer the consequences of being in an industry in which it can take two months for a loan to be settled, but with the broker possibly seeing their upfront commission clawed back due to circumstances outside their control.
“It is unjust and unreasonable that a person who is self-employed could wind up having to suffer financial hardships after having commissions taken off them 12 months later,” he said.
The FBAA chief also discussed lender's mortgage insurance disclosure and the potentially negative effects it has on borrowers who do not appreciate the full risk and obligations of LMI.
“This could be very embarrassing for government, with so many borrowers completely unaware of the hidden terms and conditions that affect their loan,” Mr White said.
“The Minister’s office is going to review my historic submissions and data on this issue and we are hopeful of a positive outcome soon on this potentially nasty issue."
Mr White also welcomed ASIC’s probe into the remuneration process in the broking sector and was confident discussions with the Minister and industry regulators would help all parties find the best outcome.
[Related: Commission clawbacks to continue, says MFAA]
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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