Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Non-majors to suffer if broker commissions are scrapped

James Mitchell 2 minute read

One of the nation’s largest aggregation groups has told regulators that broker commissions are vital to a competitive mortgage market.

In a letter to 2,600 AFG brokers, AFG managing director Brett McKeon defended broker commissions amidst ASIC’s inquiry into remuneration structures in the third-party channel.

“Late last year I met with senior figures at ASIC and APRA and with two senators currently on the Corporations and Financial Services Committee,” McKeon said.

“We discussed a range of issues including industry regulation, remuneration structure, and the positive consumer outcomes driven by our sector,” he said.

“On competition, we also discussed the fact that corralling mortgage customers into bank branch networks will have an extremely detrimental impact on Australia’s remaining second-tier lending institutions.”

Advertisement
Advertisement

Mr McKeon said the loss of the broker-based distribution network would put non-major lenders at a significant disadvantage to the large banks.

“The resources required to establish a physical branch network to compete with the large banks creates an almost impassable barrier to entry,” he said.

“By undermining the broking model, the result will be a significant reduction in competition in the mortgage sector, to the detriment of the consumer. Every mortgage customer will pay for reduced competition throughout the life of their loan.”

Mr McKeon said he left regulators with the “clear message” that mortgage broking is a “professional, highly regulated industry”.

“Disclosure, trust and high-quality service are central to our industry, and are fully supported by the current regulatory regime,” he said.

“I would ask that you all take an active part in any discussions that reinforce the importance of our sector and encourage you all to ask your clients to do the same.”

Mr McKeon's comments come after Assistant Treasurer Kelly O’Dwyer confirmed to The Adviser in November that she had written to ASIC requesting that it undertake the review to help determine the effect of current remuneration structures on consumer outcomes.

[Related: Scrapping commissions will have 'massively negative impact']

Non-majors to suffer if broker commissions are scrapped
default
TheAdviser logo
default
James Mitchell

James Mitchell

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.

 

FROM THE WEB
more from the adviser
CBA building new ta CEO of CBA spin-off to step down

CBA has announced that the chief executive of 'NewCo', its spin-o...

skyscraper Non-banks doubled commercial settlements in FY19

Non-bank lenders settled 112 per cent more broker-introduced comm...

genworth 850 Genworth revises serviceability calculator

The mortgage insurer has updated its serviceability calculator to...