The head of the FBAA has suggested that the government response to ASIC’s 2017 review of broker remuneration could be delayed until the second half of 2019 if formal conclusions aren’t made before the end of the year.
Speaking at the 2018 Industry Commercial Masterclass in Sydney on Thursday (26 July), the executive director of the Finance Brokers Association of Australia (FBAA) told delegates that he had been meeting with the Minister for Revenue and Financial Services, Kelly O’Dwyer, members of the Productivity Commission (PC) and other government officials to discuss the value of the broking industry.
Peter White revealed that he had asked Minister O’Dwyer when a government response was due on ASIC’s comprehensive report on broker remuneration, given that the consultation on the report had closed more than a year ago.
According to Mr White, the government has decided to wait until it has considered both the PC’s final report into competition in the Australian financial system and the first report from the financial services royal commission.
Noting that the PC’s final report had now been handed to the government, Mr White highlighted that the government had to table the report within 25 sitting days of receipt. Given that Parliament is not back until 13 August, he said that this could mean that the report may not be tabled until October.
He also reiterated that the interim royal commission report is not due until 30 September and that the final report is expected by 1 February 2019.
The head of the FBAA suggested that a government response may therefore not come “until the end of this year”, if not longer, given the country is expecting a federal election next year.
Recalling a situation in 2012 when Treasury was consulting on the second phase of the National Consumer Credit Protection Act (NCCP II) and delayed its response until after a federal election had taken place, Mr White warned that such a scenario could impact the industry once again, given that a federal election will be held next year.
Mr White said: “We may, or may not, get a decision on all this [review of broker remuneration] this year.
“[Minister O’Dwyer] said that, at the end of the day, there will be no determinations made on the ASIC remuneration paper until such time as the royal commission is finished, and those reports are out and the discussion has been had.”
Mr White added: “Bear in mind where we are heading this year, if we do not get decisions on these things before the end of this year, it won’t happen until the second half of the year after the federal election. That is the bottom line, and we’d just have to deal with that and roll with it as we go.”
However, the FBAA executive director said that delaying a decision was “not such a bad thing” when compared to the alternative threat of rushing a decision through in haste.
Mr White concluded: “What I wouldn’t like to see would be things pushed through quickly because that could create bad decisions, bad regulation. These things need to be done in a timely and considered manner to ensure the right outcomes are achieved in the end.
“We cannot pre-determine these things, but I can tell you now, if we do not get formal conclusions on those three papers by the end of this year, it is going to fall to the second half of 2019 and we’ll go from there. We will have to wait and see.”
Industry working together on an unprecedented level
The head of the FBAA also told delegates that while the final report from the PC could include “stuff that we are not going to like”, overall, he did not believe that there would be “anything significant in it that would badly impacted our industry”.
He continued: “There may be a couple of pieces in that report that are actually beneficial to our causes, but we’ll wait and see if that transpires. But I don’t believe that anything that is going on the with royal commission or the Productivity Commission is going to be anything that is going to create any major problem to our industry.
“Regardless of what happens, regardless of what comes out of the reports, our industry will be better as we go forward. We’ll be much stronger, we’ll be more resilient and we will continue on for another day in very, very strong and significant manner.”
Mr White highlighted that the industry had been collaborating on an unprecedented level to ensure that the authorities understand the value of the broking industry, emphasising the formation of the Combined Industry Forum to “drive change that improves customer outcomes and promote a competitive and vibrant mortgage broking industry”; the MFAA’s advertising campaign; the FBAA’s lobbying and “working on a direct basis with politicians”; and the establishment of the Mortgage Broking Industry Group to commission Deloitte’s report, The Value of Mortgage Broking.
“We all do lots of different things to help support the industry… but between the work that the CIF has been doing, the work of the individual associations and the MBIG working on the Deloitte report, they all look at how great our industry is and what its value position is.
“All these things keep measuring up different ways and different positions as to the value proposition of our industry in this country. They are great things and we need to make sure that we keep making sure our politicians and regulators are focused on what we’re doing… make sure their language is right so that when an optician makes a decision, we are in the best standing that we can be.”