Proposed changes to the ASIC Industry Funding Model could see brokers pay more than seven times as much as lenders for each dollar of credit facilitated.
The Mortgage & Finance Association of Australia this week expressed its concern about Treasury’s latest proposed changes to the ASIC Industry Funding Model.
According to the association, the proposed changes would see licensed mortgage brokers and broker groups paying up to seven times the amount for each dollar of credit facilitated compared to lenders.
“This has occurred despite the fact that brokers and broker groups hold inherently lower levels of risk than lenders,” MFAA chair Cynthia Grisbrook said.
“We believe that this equates to a ‘tax’ on brokers. Unlike lenders, brokers are – in most cases – unable to pass this additional cost on down the value chain,” she said.
According to the MFAA, under ASIC’s current proposal licensed brokers and broker groups (credit assistance providers) will face a levy rate of $1,000 plus $1.14 per $10,000 on credit intermediated greater than $100 million, compared to $2,000 plus $0.15 per $10,000 facilitated for lenders on credit provided greater than $100 million.
“On ASIC’s current calculations, this could leave licensed brokers and aggregators (where applicable) each out of pocket in the amount of $39.90 on an average $350,000 mortgage, given that the levy is charged at multiple points in the value chain. Lenders would be levied $5.25 on the same average $350,000 transaction,” Ms Grisbrook explained.
“These amounts are only payable when a relevant party has reached the $100 million threshold, which may not affect a number of brokers directly, however aggregators will be impacted and it is possible they will want brokers to participate in carrying a portion of this cost.”
The MFAA argued that the model currently under consideration is “inequitable, anti-competitive and unnecessarily complex to administer”.
Ms Grisbrook said it also favours balance sheet lending over securitisation, disadvantaging the vast majority of smaller lenders.
“It could also have many unintended consequences, including the consolidation of licensing. Many individually licensed brokers may hand back their licence and join broker groups to avoid these disproportionate new licensing costs, which would reduce industry competition.”
The MFAA is currently working with members and other industry participants to develop an alternative model.
[Related: MFAA slams proposed single EDR scheme]
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.
The mortgage technology provider has tapped into open banking dat...
The lender’s co-chief executive believes this will sustain gro...