The industry body is calling for federal government action to cut lending friction and align costs with actual risks.
The Mortgage & Finance Association of Australia (MFAA) on Friday (30 January) lodged its 2026–27 pre-budget submission, calling for the Albanese government to enact targeted reforms to make home and business lending more efficient, competitive, and sustainably regulated amid ongoing economic pressures.
The 2026–27 federal budget is scheduled for May, with a specific date yet to be announced, and the deadline for pre-budget submissions was 30 January.
Individuals, businesses, and community groups were invited to submit their ideas and priorities for the budget, which the government will reportedly consider when developing its policies and strategy.
MFAA CEO Anja Pannek said on Wednesday (4 February) that Australians continue to grapple with inflation, cost-of-living strains, and housing affordability hurdles, creating an urgent need for system-wide improvements.
“The 2026–27 Budget presents an opportunity to move beyond short-term relief measures and focus on practical reforms that improve outcomes for households and small businesses,” Pannek said.
Brokers positioned as competition engine
The submission said that borrowers and small businesses need a lending system that delivers real choice, smooth switching, timely credit access, and proportionate oversight across home and business loans.
Pannek emphasised that these goals depend on the broking channel, which now handles 77.3 per cent of new home loans and more than 30 per cent of business loans nationwide.
“Brokers translate complex policy and regulations into real outcomes that support competition, choice and access to credit,” she said.
The MFAA identified four priority areas: boosting home lending competition through process reforms; embedding the Consumer Data Right as essential infrastructure; aligning regulatory costs with risk profiles; and streamlining overlapping rules across jurisdictions.
Discharge delays targeted with specific fixes
The MFAA said eliminating friction was its central focus around refinancing and discharge processes, with the association stating that borrowers were currently facing unnecessary delays and administrative hurdles.
The submission called for lenders to present their best possible retention offer immediately upon receiving a discharge request, rather than engaging in prolonged negotiations.
It also proposed a strict 10-business-day deadline for completing discharges and formal authority to allow brokers to manage ongoing processes on behalf of clients with proper consent.
The MFAA also said that greater coordination of state and federal first home buyer schemes would further improve navigability, reducing confusion for eligible borrowers pursuing multiple programs.
Consumer Data Right as lending backbone
The broker association also wants the Consumer Data Right elevated from an optional tool to a core lending infrastructure, with expansion into business lending to match its use in residential cases.
It put forward specific proposals, including expanding available datasets, to potentially incorporate relevant government-held information like ATO records and enable third-party consent arrangements.
The MFAA stated that clear government guidance on phasing out screen-scraping practices would also resolve ongoing uncertainty surrounding legacy data access methods.
Pannek said the changes would make assessments faster and more reliable, while positioning brokers within a modernised digital lending framework.
Regulatory costs must match broker risk profile
The association wrote that its members had flagged rising regulatory burdens, particularly around the Compensation Scheme of Last Resort (CSLR), as a growing concern for business viability.
While supporting the scheme as a necessary consumer protection, the MFAA insisted that levy calculations should reflect brokers’ actual claims experience, which it said remained low compared to other channels.
“Industry regulation, and the associated costs, must be proportionate and aligned to risk,” Pannek said.
“Mortgage brokers have very low CSLR claims, and regulatory costs should reflect that. Risk-aligned levy settings are essential to protecting consumers without placing unnecessary costs on broker businesses.”
The submission recommended maintaining professional indemnity insurance as the primary safeguard, with CSLR positioned strictly as a last-resort mechanism.
Co-ordination needed across jurisdictions
According to the broker association, regulatory complexity compounds these pressures, with the MFAA calling for federal leadership to harmonise state and territory payroll tax rules – a chronic pain point for interstate operators.
Its submission advocated an improved reportable situations regime that allows appropriate information sharing between aggregators and brokers during risk management, without compromising investigations.
The MFAA also called for a legislated simplification of design and distribution obligation requirements for best interests duty-compliant (BDI) brokers.
It said regulatory settings designed for large institutions should not cascade unfairly onto smaller operators and that risk-based scaling of compliance expectations was needed.
Pannek added the recommendations were drawn directly from brokers working on the frontline of lending markets.
“The recommendations that we make in this pre-budget submission are grounded in the practical experience of mortgage and finance brokers operating on the front line of Australia’s home lending and business lending markets,” she said.
“They focus on reducing friction and improving certainty so that competition functions effectively in practice while supporting productivity, resilience and consumer confidence.”
[Related: MFAA calls on ASIC for clearer broker guidelines in regulatory guide]
