As polling day approaches, The Adviser asked members of the broking industry which political party they believe would most benefit the broking industry if elected.
When asked which political party has brokers’ interests at heart, industry leaders pointed to the Coalition, explaining that the opposing major party has been less consistent in its messaging around the future of broker remuneration.
As Anthony Landahl, managing director at Equilibria Finance, said: “Treasurer Josh Frydenberg came out on the day the [royal commission final report] was released and rejected one of the recommendations around the removal of upfront commissions, and within about a month, he came out and strongly advocated for the maintenance of trail and for trail to be reviewed in three years.
“Additionally, Prime Minister Scott Morrison came out and talked about the benefits of the broking industry to competition and choice. Whereas the Labor Party has been a lot less forthright and more wishy-washy in their response.”
He concluded: “I think the Coalition government will most benefit the broking industry, as [it] has a better understanding of the small business environment and the value the broking industry offers to clients.”
Bianca Patterson, director at Calculated Lending, presented a similar view, pointing out that she had attended a meeting with Labor Party leader Bill Shorten. Despite Mr Shorten acknowledging that brokers were never the target of the royal commission, the party has “[held] firm on [its] remuneration position, preferring to use our industry as a political football than to admit they accepted the 76 recommendations too hastily.”
“The Liberal Party, on the other hand, has shown a genuine interest in our industry, taking time to understand the unintended consequences of making drastic changes to a remuneration model without proper industry consultation,” Ms Patterson said.
“A government that is willing to work with an industry to review and implement change is far more beneficial than one who intends to use a sledgehammer to crack a nut.”
Meanwhile, the COO of HashChing, Siobhan Hayden, noted that “on face value”, it seems that if the Coalition was re-elected, there would be “more stability” in the broker remuneration model.
While both major political parties were firm in their initial statements that they would be implementing commissioner Kenneth Hayne’s recommendations – which included abolishing lender-paid broker commissions – they backtracked shortly after.
Following widespread campaigning and lobbying by the broking industry, the Liberal Party announced that, if re-elected, it would look at reviewing the impacts of removing trail in three years’ time rather than abolishing it next year as originally announced, while the Labor Party proposed that lenders instead pay brokers a standardised upfront commission as a proportion of the loan amount. It suggested that commissions be capped at a fixed rate of 1.1 per cent.
Ms Hayden commended the lobbying efforts of the broking industry, saying that the royal commission’s final recommendations were “so bad to our industry that we mobilised, and we were quick to engage with MPs”.
“When commissioner Kenneth Hayne was looking at unravelling what he viewed as conflicted remuneration, the challenge with any change is [whether] you [are] moving to something better.
“Sometimes it’s easy to say, ‘Well, that’s not ideal, but we’ll move to X’, without actually considering the impact of the change,” the HashChing COO said.
Graeme Holm, director at Infinity Group, was more sceptical and reluctant to pick a party, but said that he was prepared to “passionately support the party that actually invests in getting the right people at a ground level to understand the loan process and who invests in improving the process, not destroying it, as that’s going to deliver a better outcome for the consumer”.
“Get an MP, an analyst or an ivory tower decision-maker to sit in our businesses for a week to understand what we do and what we deliver for our customers, and only then can they make a judgement on whether we’re acting in the customer’s best interests,” he said.
“I’m a big believer that we’re here for the customer, and if we do the right thing by the customer, they will be here long term and so will we.”
Mr Holm continued: “If we start batting on about which [party’s] got the better argument to win votes, rather than which side actually has the consumers’ interests at heart, nobody wins.”