Former Treasurer turned Prime Minister Scott Morrison is on the side of finance brokers, according to the executive director of the FBAA.
Speaking with The Adviser, Peter White, the executive director of the Finance Brokers Association of Australia (FBAA), said that recent discussions with the nation’s 30th Prime Minister suggests he is in support of the broking industry, including how brokers are currently remunerated, and wants to avoid “unnecessarily increasing regulation”.
While regulatory tightening is inevitable, Mr White said that it will most likely impact lenders more than brokers. But the downside is that brokers “are at the tail-end of it”.
For example, increased regulatory scrutiny has prompted lenders to tighten up their credit policies around income and expenses in recent months, now requiring brokers to conduct more thorough checks to ensure their clients’ financial positions are accurately reflected in mortgage applications.
Commenting on Treasury’s submission to the financial services royal commission, the FBAA executive director said that the government department is “generally happy” with the industry’s proactiveness in addressing issues through co-regulation — for example, through the Combined Industry Forum.
A similar sentiment was communicated by Shehan Wijayasinghe, the director of Melbourne-based brokerage Elephant Financial.
“Treasury, through their prior comments, showed support for the broker industry by understanding that trail and upfront didn’t detract from the customer’s outcome and a broker’s goal of providing the right service,” Mr Wijayasinghe told The Adviser.
“The unfortunate missteps of a few should not tarnish what on mass is a great industry, a great force for competition and an overall service that through our market share is deemed appropriate.
“I look forward to seeing the new PM take this position further with regards to the response from the [Productivity Commission].”
Mr White added that the current government recognises that regulatory bodies, such as the Australian Securities and Investments Commission, are already working on addressing real and perceived issues around lender-paid broker remuneration and vertical integration.
However, the FBAA executive director noted that the absence of a financial services minister — a position that was last week held by Kelly O’Dwyer — under Mr Morrison’s leadership is “disappointing” in that the government is yet to figure out which ministry will have oversight on the broking industry.
“I’ve been to Canberra every day this week trying to find out who holds our portfolio, and I think it’s disappointing that it hasn’t been dealt with earlier and quicker,” the FBAA executive director said.
But this is not necessarily a bad sign, according to Mr White, because it could mean that the government has confidence in the broking industry and the regulations under which it currently operates.
“It would be nicer in my head if we had formal ministerial governance going on, but if not, it may be actually a sign of confidence from government in what we’re doing,” the FBAA executive director said.
Now that Kelly O’Dwyer has been sworn in as Minister for Job, Industrial Relations and Women, Mr White’s suspicion is that Liberal senator Zed Seselja, who has been appointed as the Assistant Minister for Treasury and Finance, will be the one looking after Ms O’Dwyer’s previous portfolio.
The FBAA executive director expects the government to clarify this by the end of the week.
He also noted that he will be meeting with the new federal Treasurer Josh Frydenberg and Shadow Treasurer Chris Bowen, as well as other relevant ministers, in the upcoming weeks for ongoing discussions on the future of the broking industry.
“Some people don’t understand how everything we do has got political consequences at the back end... It’s politicians who actually decide our outcomes, so we’ve got to well and truly be on side with them to ensure that we [get] what is best for our industry and what is best for the borrowing marketplace,” Mr White said.
His message to brokers is, “We got this.”
“It doesn’t mean we’ve got the answer, but we’'re doing everything we can to make sure it works out as best as possible,” Mr White said.