Senate crossbencher Cory Bernardi is the latest policymaker to caution against reform that would undermine the third-party channel, stating that mortgage brokers are the “collateral damage” of the banking royal commission.
With both the Coalition government and Labor opposition announcing their policy responses to recommendations outlined in the banking royal commission’s final report, it could be up to parliamentary crossbenchers to determine the fate of the broking industry, if they hold the balance of power following the next federal election.
In a statement to The Adviser, Australian Conservative senator Cory Bernardi stressed the importance of the broker proposition, and issued a warning against legislative reforms that would bolster bank profitability to the detriment of the broking industry.
“The collateral damage from the royal commission are mortgage brokers, and the commission’s targeting of them will only serve to wreck one industry and further profit the banks,” he said.
“Overwhelmingly, I use a mortgage broker because they make my life easier, and if the legislation in reaction to the commission’s recommendations destroys the mortgage broking industry, ordinary Australian consumers will be worse off in terms of choice and convenience.”
Mr Bernardi joins crossbench colleague and One Nation leader Pauline Hanson in voicing support for the mortgage broking industry.
Earlier this month, Ms Hanson criticised Commissioner Kenneth Hayne’s call for a borrower-pays remuneration model and backed the preservation of both 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.”