The head of an industry association has stated that brokers “should not be worried” about the royal commission into misconduct should it cover the broker market.
On Friday, several media outlets stated that the royal commission into misconduct in the banking, superannuation and financial services industry would cover brokers and payday lenders, too.
While the reports have not been confirmed by government, The Sydney Morning Herald published a story on Friday emphatically stating: “The royal commission into the banking and financial services sector will be expanded to include mortgage brokers and payday lenders as part of the largest investigation into the financial system in Australian history.
“Commissioner Kenneth Hayne will now be empowered to investigate all agencies that hold an Australian credit licence, including unscrupulous lenders outside of the major banks, during the 12-month inquiry.”
Speaking to The Adviser after the reports were released, the executive director of the Finance Brokers Association of Australia (FBAA), Peter White, stated that he was not surprised that the commission could cover the third-party channel given that more than half of mortgages are now written by brokers.
Mr White said: “We have a very robust banking system but it is so big that it is fraught with more challenges. We can see that with what is happening in the financial services space and the insurance space, the breaches of AML/CT and the intelligent deposit systems. There are issues in that space. So, the royal commission that is coming in was bound to happen. There has been so much happening in the marketplace that it shouldn’t be unexpected.
“But, as far as the royal commission goes in terms of overlapping into broking, I'm happy to come out and say that there is nothing systemically wrong with broking and I don’t think brokers should be worried about it.”
Mr White added that the draft terms of reference for the commission states that the commission is not required to inquiry into a particular matter that might prejudice, compromise or duplicate another inquiry, investigation or criminal or civil proceedings — so he hoped that any aspect that covers the broking space would not be going over old ground.
“Brokers are already under heavy scrutiny by ASIC and we have the remuneration paper and discussions that are happening there with the Minister [for Revenue and Financial Services, Kelly O’Dwyer] so the commission should not look to duplicate things that are already happening, but instead investigate other issues that are yet to be discussed,” the FBAA CEO said.
[Related: Royal commission will look at remuneration]
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