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.

ASIC to release second broker remuneration report

presentation  presentation
Staff reporter 3 minute read

The corporate watchdog has confirmed that its surveillance of mortgage broker remuneration is not over, with a fresh report on consumer outcomes to be released next year.

ASIC this week released details of a handful of surveillance operations it is currently carrying out across the mortgage market.

ASIC’s Corporate Plan 2017–18 to 2020–21 has a major focus on credit, with interest-only mortgages, reverse mortgages and broker remuneration all under investigation.

The regulator said that its surveillance of mortgage broker remuneration is a “continuing project” from 2015–16 and that its focus moving forward will be to identify the effect of remuneration structures on the quality of consumer outcomes in the mortgage broking market.

“This builds on our findings in Report 516 Review of mortgage broker remuneration and including a shadow shop of brokers. We will release a public report in 2018,” the regulator said.

Advertisement
Advertisement

Interest-only home loans are also on the agenda. ASIC will release a report by the end of this year based on its review of responsible lending practices among brokers and lenders with a high proportion of interest-only loans.

Speaking to The Adviser, Michael Saadat, ASIC’s senior executive leader for deposit takers, insurers & credit services, elaborated that while the regulator believes that brokers are having the appropriate discussions with consumers about the reasons for taking out IO loans, the record keeping on loan files has not been of a high standard.

He revealed: “In the past, I’d say we have seen pretty poor record keeping on that front, where there has been very little on the loan file which tells you why the consumer got that product.

“In general, when we have looked at loan files in the past, we have seen [responses to the question]: ‘What were the consumers’ requirements and objectives?’ In many cases, we see things like: ‘To buy a house.’ That is pretty implicit, but it really doesn’t tell you too many things about what type of product, what type of loan, what type of rate, etc.

“So, our view is that although these discussions are happening… brokers are having these discussions, but they’re not recording the outcomes of those discussions. And it’s hard to prove that you’re meeting your obligations if you don’t have something on a file that shows why you have recommended a particular loan.”

One of ASIC’s new projects will focus on reverse mortgages, with a public report to be released in the first few months of next year.

The regulator said that it will look into reverse mortgage selling practices to older Australians and those approaching retirement, including testing compliance with responsible lending obligations and measuring consumer understanding of the products.

[Related: ASIC to review loan files of ‘high IO’ brokers]

ASIC to release second broker remuneration report
presentation
TheAdviser logo
presentation
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
EU Study Tour 2019 ta Learnings from the EU Study Tour

The Adviser’s EU Study Tour 2019 took place in Dublin, Ireland,...

Peter White FBAA backs new mortgage pricing inquiry

The head of the FBAA has expressed strong support for the ACCC’...

Brad Crinion ta Brokers the ‘first line of defence’ for application accuracy

In a post-royal commission environment, brokers are labelled the ...