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Broker policy contest heats up

by Charbel Kadib5 minute read
Scott Morrison and Bill Shorten

Popular support for the Coalition government has improved, according to new polling, amid renewed praise for the mortgage broking industry from Prime Minister Scott Morrison.

According to the latest Newspoll, the election race has tightened, with the gap between the Liberal-National Coalition and the Labor opposition narrowing on a two-party preferred basis, from 52 per cent to 48 per cent a fortnight ago, to 51 per cent to 49 per cent in Labor’s favour.  

The Coalition’s primary vote (38 per cent) has also pulled ahead of Labor’s (37 per cent); however, both major parties conceded territory to the minor parties, reporting a decline from a stalemate of 39 per cent two weeks ago.

Among the policies contested by the major parties are their respective stances on broker remuneration in response to recommendations handed down by commissioner Kenneth Hayne in the final report of the banking royal commission.

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The Coalition has said that if re-elected to government, it would maintain the status quo, reneging on its initial plan to ban trail commissions from 1 July 2020.

The Labor opposition, however, has backed commissioner Hayne’s call for a ban on trailing commissions and has proposed the introduction of a fixed upfront fee, capped at 1.1 per cent.

Both parties have agreed to holding a Treasury-led review in three years’ time (2022) to assess the progress and future trajectory of remuneration reform.

The Prime Minister recently reiterated his support for the third-party channel in a letter addressed to the mortgage broking industry.

“Mortgage brokers are critically important to competition, and delivering better consumer outcomes in the mortgage market,” he said.

“Almost 60 per cent of residential mortgages are settled by mortgage brokers. There are 16,000 mortgage brokers across Australia – many of which are small businesses – employing more than 27,000 people.

“The government wants to see more mortgage brokers, not less.”

Mr Morrison also strongly criticised Labor’s remuneration proposal, warning that under its plan, brokers would not get “properly compensated” for the value they offer to clients.

Labor’s negative gearing and capital gains tax policies were also flagged by the Prime Minister as risks to stability in the property market.

The Bill Shorten-led Labor opposition has proposed to limit negative gearing to new properties and halve the capital gains tax concession from 30 per cent to 15 per cent.

“These proposals would have a detrimental impact on mortgage brokers and real estate professionals like yourself and your clients,” Mr Morrison added.   

“Unlike Labor, we support you and your industry. We will continue to advocate for you and the interests of the consumers you serve so well.”

The Labor opposition has stood by its remuneration policy, with shadow treasurer Chris Bowen recently stating that “there was, and is, a strong case for thinking carefully about the royal commission recommendation and ensuring we protect competition in banking.

“That’s exactly what we did,” he told delegates at a recent banking summit.

Mr Bowen added: “We consulted with mortgage brokers, we consulted with banks and financial institutions – particularly the smaller ones.

“We came up with a different way of removing conflicted remuneration for mortgage brokers. We announced that we would have legislated a flat upfront commission rate to avoid mortgage brokers’ advice being conflicted by the rate of the commission offered,” he said.

Mr Bowen concluded: “When we make big calls – and we’ve made quite a few of them – we stick to them, fight for them, and seek to mandate for them, which is what we’ll be [doing].”

Pre-polling for the federal election has already commenced, with voting set to conclude on Saturday, 18 May.

[Related: Treasury-led commissions review ‘has to go’: FBAA]

scottmorrison billshorten ta

Charbel Kadib

Charbel Kadib

AUTHOR

Charbel Kadib is the news editor on The Adviser and Mortgage Business.

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