The head of a national brokerage has slammed Rice Warner’s suggestions that broker commissions should be outlawed, pointing to the firm’s ties to the financial planning industry.
In an article titled Governance of Mortgage Brokers, published this week, Rice Warner took aim at aspects of the mortgage broking industry in light of ASIC’s remuneration review, released in March. Submissions regarding ASIC’s findings are due today.
However, MoneyQuest managing director and former Mortgage Choice CEO Michael Russell says Rice Warner’s insights reveal a complete lack of understanding of just how the broking remuneration structure plays a pivotal role in the health of a competitive mortgage market in Australia.
“Rice Warner’s criticisms of the ASIC review, the present broker remuneration model and the quality of advice provided by mortgage brokers is testament that since its inception in 1987 it has immersed itself in the financial planning industry and never ventured outside of it,” Mr Russell said. “Fortunately, ASIC understands this well,” he said.
“Australian mortgage holders are well served by banks and non-bank lenders where mortgage pricing is unaffected based on the channel of choice they choose.
“To naively suggest substituting the present remuneration regime with a flat fee paid by consumers shows a disregard for consumer best interests and the pricing parity we have in place today.”
Mr Russell said comments about the quality advice provided by mortgage brokers is equally unfounded as refuted in the ASIC review and by Deloitte.
“There is no smoking gun nor has there ever been,” he said. “Rice Warner in suggesting the mortgage broking industry should look to the FOFA reforms has conveniently neglected to acknowledge that FOFA was conceived from a financial planning industry racked with falling consumer trust and confidence. This is not the case with mortgage broking.”
The mortgage broking industry has a very proud history of evolving compliantly and collaboratively with all of our stakeholders and will continue to do so with the upcoming reforms, Mr Russell said.
“ASIC has correctly identified a number of perceived conflicts and they will be dealt with effectively and efficiently without the sledgehammer suggested by Rice Warner.”
[Related: Fresh calls to 'outlaw' broker commissions]