Commissioner Kenneth Hayne’s recommendation to ban upfront and trailing commissions paid to brokers would “decimate” the industry, One Nation leader Pauline Hanson has said.
Federal Senator and leader of political party One Nation, Pauline Hanson, has criticised Commissioner Kenneth Hayne’s call for a borrower-pays remuneration model in the mortgage industry and backed the preservation of upfront and trailing commissions.
Ms Hanson said that the proposed ban on upfront and trailing commissions paid to brokers, as outlined in the banking royal commission’s final report, has “jeopardised the survival of more than 17,000 small businesses across Australia”.
“That’s the number of mortgage brokers providing loans to mums and dads, who rely on upfront and trailing commissions paid by the lender to survive,” Ms Hanson said. “Take those commissions away and make the borrower pay and you will decimate the industry.”
She added: “That’s tens of thousands of jobs, millions of dollars in tax revenue and much less competition for the big banks.”
The Senate crossbencher also warned that the ban on commission-based remuneration could limit the competitive aspirations of smaller lenders that have “shifted into regional areas to partially fill the void left by the big banks”.
“Those small lenders, including regional banks and credit unions, rely on mortgage brokers to reach customers,” she said.
Ms Hanson also said the royal commission’s recommendations relating to home lending contained “several flaws” and accused Commissioner Hayne of showing “little knowledge of how the mortgage market works”.
The Senator went on to highlight the services that mortgage brokers provide, including their role in providing customers with choice, arranging bespoke loans, negotiating lower interest rates, handling compliance procedures, and providing post-settlement services.
Senator Hanson added that a customer’s access to information in the mortgage market would be limited if the industry is undermined by Commissioner Hayne’s proposals.
“Knowing what is going on in the market is very important if the customer wants the best deal. Which bank has the best deal for fixed-rate loans this week? What lender is looking for long-term home loans? Who wants to lend to agri-businesses? Mortgage brokers know what’s going on in the market. Consumers don’t,” she said.
“I can’t imagine someone walking into Commonwealth Bank and being refused a loan, only to hear the customer service representative suggest they go down the road to ANZ.”
Ms Hanson urged both the government and opposition to reconsider their policy approaches and called for greater consultation with the broking industry.
“[Commissioner] Hayne has these recommendations wrong. The government and Labor are blindly walking into a huge trap by abolishing trailing commissions,” she said.
“Bill Shorten and Scott Morrison need to consult with the industry before making these sweeping changes or they risk enormous fallout.”
Ms Hanson’s crossbench Greens colleagues, however, have expressed support for the full implementation of Commissioner Hayne’s 76 recommendations and reiterated their support for “ending bank commissions for mortgage brokers”.