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ASIC review ‘unlikely to result in strategic shift’

by Francesca Krakue7 minute read
The Adviser

The Australian Securities and Investments Commission's review into broker remuneration is unlikely to result in commissions being banned completely, an industry researcher has predicted. 

The principal of Digital Finance Analytics, Martin North, told The Adviser that having tracked the mortgage industry, and with extensive research into broker commissions, it is his opinion that the ASIC review into broker remuneration is “unlikely to result in a strategic shift in the structure of the industry”.

According to Mr North, his surveys of consumers show that they are “much happier about the experience of getting a loan via a broker than going directly to the banks,” and therefore he believes brokers will see continued volumes of growth.

In light of this, Mr North said that he predicts the outcome of the ASIC review will leave commissions as they are, “or maybe moving up a little”.

“In the UK when they looked at this whole area, they actually banned commissions completely… but my own view is that it’s very unlikely in the Australian context,” Mr North said.

“I think it's more going to be that we will see commissions continuing, in a somewhat similar light to what they currently are,” he added.

Mr North concluded: “But the emphasis will be on much stronger disclosure of those commissions to consumers at the point at which they interact with a broker, so that people are making more informed decisions about who they use for their advice and understand the remuneration models that exist."

[Related: FBAA continues to defend broker commissions]