The broking sector should avoid “throwing the baby out with the bath water” in responding to the Australian Securities & Investment Commission’s remuneration review.
That’s according to Peter White, executive director of the Finance Brokers Association of Australia (FBAA), who advised caution in responding to the ASIC review into broker remuneration.
He said that it’s important that during the ASIC and Treasury REM consultation process that “over eagerness” doesn’t lead the industry to make “poor decisions” and “impact people’s lives”.
The FBAA head was responding to claims that ASIC’s remuneration review was an opportunity for brokers to self-regulate. He argued that as the industry is regulated by ASIC, it can never truly self-regulate, with the FBAA calling the suggestion ‘way off the mark’.
The Mortgage & Finance Association of Australia (MFAA) last week responded to the ASIC review and argued the industry should “embrace change voluntarily”. MFAA CEO Mike Felton said: “The time to prosecute these issues with ASIC has passed, and avoiding them is simply not an option.”
“Lenders and aggregators will need to be responsible for the monitoring of brokers, using a risk-based approach that draws on both loan and performance data provided by lenders,” he said, while emphasising that addressing the review’s recommendations would be the industry’s only chance to prove that it can self-regulate.
However, Mr White said the FBAA had had internal dispute resolution processes for over 10 years but that the tribunal did not and could not replace ASIC’s role, nor that of the courts, the ombudsman or other resolution processes.
“It certainly does not constitute true self-regulation,” Mr White said. “For true self-regulation to exist, one needs to formulate the rules, write them and then police them without external influence.”
“In the case of ASIC’s REM review, the industry can have input and offer guidance on possible measures and outcomes, but the decision is made by the minister through Treasury, and ASIC then polices those outcomes.”
The FBAA has maintained a strong stance against changes to commission structures, declaring that changes could damage the profession while offering no real benefits to consumers.
“As an industry association, we need to be extremely careful how things impact commercial arrangements, as we cannot make such considerations on behalf of our members.
“However, as we know, ASIC believes there needs to be some tweaking so we need to carefully tread this path without rushing into making poor decisions that impact people’s lives.”
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