ASIC’s remuneration review is expected to be finalised in the coming weeks, according to a major bank that believes upfront and trail commissions are the “proper way” to remunerate mortgage brokers.
Speaking at the Better Business Summit in Brisbane last week, NAB’s general manager of broker distribution Steve Kane told brokers the review will focus on several key issues.
“We assume that the report will be published in the next couple of weeks,” Mr Kane said.
“NAB’s view is that upfront and trial is the proper way in which to remunerate brokers for the services they provide to the community and to their customers.”
“Providing it is transparent and everyone knows who is getting paid when and why, then that is perfectly reasonable,” he said.
“That has been our stated position and remains our stated position in our discussions with the regulators.”
Mr Kane said responsible lending will form part of the remuneration review, with a key focus on ensuring the level of consistency is maintained around the application of responsible lending.
“Anything that could be perceived, even if it is disclosed, to have any bias or change the view of those in the marketplace who are introducing customers to lenders will be something that really needs to be looked at,” he said.
ASIC’s investigation into broker remuneration has been the subject of much speculation in the third-party channel since it was first announced more than a year ago. While the report was scheduled to be completed by the end of 2016, it is understood that the corporate regulator was granted an extension by Treasury in light of the magnitude of the data collected. ASIC has collected information from brokers, aggregators and lenders.
According to Mr Kane, ASIC took an interest in how brokers are accredited and how lenders deal with brokers who have engaged in “malfeasance”. The corporate regulator was also interested in understanding how clawbacks work, particularly in relation to trail commissions.
“The spotlight is on this industry because it is now the most significant part of the mortgage industry in Australia,” Mr Kane said.
In a blog published today, NAB’s executive general manager of broker partnerships, Anthony Waldron, said the rise of the mortgage broking industry, to become the major distributor of mortgages, is due to a public vote of confidence.
“The industry’s rapid growth during the past few years has brought unprecedented opportunity, and with that also comes a healthy dose of scrutiny,” Mr Waldron said.
“NAB has worked hard and continues to build an ever-improving service for both our brokers and our customers, where trust is the common denominator.”
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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