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Banks to work with broking industry on commission changes

by James Mitchell5 minute read

The CEO of Australia’s largest brokerage is confident that the banks will consult with the third-party channel before making any decisions around broker remuneration.

Aussie chief executive James Symond expressed his optimism about the remuneration reviews in a recent interview with The Adviser, pointing out that history has shown that each time our industry has faced challenges, consumers have voted with their feet and their share of the market has grown.

“This is an industry that moves in cycles and this is just the latest chapter in this constant evolution,” Mr Symond said. “Much of what ASIC found was positive from an industry and consumer point of view, as these recommendations support competition and sustainability in the mortgage broking sector.”

However, when it comes to the Sedgwick review, the Aussie Home Loans boss stressed that it is important that the differences between banking and broking are recognised.

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“I read the review with interest and noted that Sedgewick was closely aligned with the ASIC review findings, however I know the industry remains concerned due to the report’s lack of consultation with the mortgage broking sector and suggestions for changes to commission structures, which go well beyond ASIC’s recommendations,” Mr Symond said.

“The majority of the findings were focused on the banking sector itself, and I am keen to ensure we recognise and appropriately consider the differences between the two industries,” he said.

“In relation to the banks — who commissioned the report — we are confident that they will continue to recognise the important role our sector plays in helping their customers and therefore they will consult and make decisions in conjunction with us.”

Mr Symond’s comments come after the Sedgwick review prompted strong reactions from brokers, industry bodies and franchise heads. Melbourne-based broker and former CBA employee Maria Rigoni believes the ABA-commissioned Sedgwick review is looking to "support cartel behaviour" and has used the term ‘commission’ unethically. Smartline’s Joe Sirianni questioned the integrity and independence of the report, while the FBAA’s Peter White accused the big banks of “regulatory manipulation”, urging them to allow ASIC and Treasury to make appropriate determinations on broker commissions.

Aussie’s James Symond said consumer confidence will always be the greatest driver for the growth and success of the mortgage broking sector and the job of the regulators and industry bodies is to help us achieve that.

“As long as all parties involved remember that principle, I believe a stronger industry and a larger market share is a possibility,” he said.

“Broad consultation and careful planning is the key to achieving this.”

The ABA-funded Sedgwick report, released last month, made a number of recommendations about broker remuneration. Meanwhile, ASIC's review is under consultation until 30 June. 

[Related: Major banks to change broker commissions]

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James Mitchell

James Mitchell

AUTHOR

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

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