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Net of offset changes to help clean up ‘dog’s breakfast’

by Charbel Kadib5 minute read
Peter White and Mike Felton

Industry associations have welcomed the federal government’s decision to extend the net of offset repayment period for broker commissions. 

Earlier this week, Commonwealth Treasurer Josh Frydenberg revealed that the Morrison government had been taking into account industry responses to its recent consultation on the upcoming best interests duty for brokers, and will move away from its previously announced 90-day cap when determining the maximum drawdown amount on which commissions can be paid on home loans.

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According to Mr Frydenberg, stakeholder responses argued that the three-month calculation period for the net of offset payments as part of the broking reforms proposed in its National Consumer Credit Protection Amendment (Mortgage Brokers) Bill 2019 “was too short”. As a result, this cap will be extended to a full 365 days.

Treasurer Frydenberg told the 900-strong audience at AFG’s Next conference that the revision would “allow brokers to be more fairly remunerated for the funds that they arrange”.


The Finance Brokers Association of Australia (FBAA) and the Mortgage & Finance Association of Australia (MFAA) have welcomed the government’s decision.

Speaking to The Adviser, FBAA managing director Peter White said the revision is a step in the right direction in helping to address confusion that surfaced following the Combined Industry Forum’s (CIF) move to limit upfront commission payments to the amount drawn down by a borrower.

“I think it’s completely the right decision,” he said. “It probably took a little bit too long to get there, but it was a consequence of the industry trying to deal with ASICs remuneration review. The net of offset [changes] became a bit of a twist off the back of the CIF reforms.”

Mr White continued: “The whole thing has wound up as a dogs breakfast after there was an agreement, there was a whole host of things happening between different lenders, so [the government’s revision] brings it back to a sensible position for it to be in.

“Its the right decision, and cheers to the government for doing it.” 

MFAA CEO Mike Felton also welcomed Treasurer Frydenberg’s announcement, which he said was yet another sign of the government’s commitment to working constructively with the broking industry.

“The MFAA welcomes the Treasurer’s announcement that the drawdown period is to be extended from the proposed 90 days to 365 days,” he said.

“This demonstrates the value of a comprehensive Treasury consultation process. It also provides a reasonable period for funds to be drawn by the customer and the opportunity for brokers to be more appropriately remunerated for such use – which we urge lenders to embrace. 

“This is further evidence of a government that values the contribution that mortgage brokers make to competition, choice and access to credit.”

The federal government is expected to table its best interests duty bill in Parliament before the end of the year. 

[Related: Government agrees to 365-day net of offset payment]

Net of offset changes to help clean up ‘dog’s breakfast’
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Charbel Kadib

Charbel Kadib


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


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