Remuneration changes won’t spark broker exodus

“I don't think the change in remuneration structure is a reason for a broker to decide whether they want to stay in or get out of the business,” Mr Gibson said.

“Most mortgage brokers got into the business because they want to help customers, they have a certain skill set, and they want to utilise that. 

“Mortgage brokers have a business model, as does any small business person, so they look at that business model based on how they earn an income, what services they provide, and they will continue to do that.”

Mr Gibson went on to add that ING would continue to invest in its broker network, irrespective of the remuneration model.

“[The upfront model] still works for us, whether there is a larger upfront or whether it’s a prolonged trail,” he said.

However, the head of third party stressed the importance of ensuring that changes to remuneration don’t conflict with potential obligations under a proposed best interests duty.

Mr Gibson suggested that a standardised commission rate could help reduce perceived conflicts.

“I think the important thing to take into consideration is: how much time is actually needed to make sure that there’s no conflict through what we’re trying to achieve. 

“If you look at [commissioner Kenneth Hayne’s] report in particular, one of the things that came out of the report was the best interests duty, so there was an importance for mortgage brokers to have the customers’ best interests at heart.”

He continued: “What’s got to be taken into consideration is that, are changes to remuneration going to conflict with that initiative or is it actually going to go hand in hand with that.”

“From our perspective, we’re happy to work with whatever gets legislated, we’re happy to make sure that mortgage brokers [remain viable] and that there’s no detrimental economic benefit to mortgage brokers. 

“If we want to have an ongoing channel that’s important for consumers, it has to be viable, and in other words, we have to make sure that what gets remunerated to those brokers is roughly the same.”

Mr Gibson noted the importance of sustaining the broker channel to fostering competition in the mortgage market.

“It’s absolutely imperative for competition for everyday Australians that mortgage brokers are a viable channel to distribute mortgages,” he said.

“If customers want to choose mortgage brokers so they can get that choice and gain access to smaller lenders, or larger lenders, you really don’t want to take that away. 

“The viability of the broker channel is absolutely important for all Australians.”

Mr Gibson echoed the remarks of Liberal Party senator Zed Seselja, who recently highlighted the competitive utility of the broker channel.

“The fear is that if there is a change of government to the Labor Party, the industry would really be set back,” he said.

“What that would do is drive people back to the big banks.

“There is no doubt that mortgage brokers bring competition to the big banks.”

[Related: ALP showing ‘willingness’ to discuss commissions]