The Treasurer, Josh Frydenberg MP, has released the Royal Commission’s final report and with it, our government’s response. The government has agreed to take action on all 76 recommendations made by Commissioner Hayne.
The government’s principal focus is on restoring trust in our financial system and delivering better consumer outcomes, while maintaining the flow of credit and continuing to promote competition. These objectives are vitally important to the health of the economy and therefore to the health of our community.
The government recognises the importance of the mortgage broking sector, which comprises more than 16,000 mortgage brokers employing 27,000 Australians who provide essential competition to the banks.
In response to the Royal Commission, the government will implement reforms to the mortgage broking sector that will:
• Put in place a best interests duty; and
• Ban trailing commissions and volume based bonuses on new loans from July 1, 2020.
In relation to moving to a borrower pays remuneration structure for mortgage brokers, the government has indicated it will proceed cautiously by conducting a review in three years’ time to assess the effectiveness of our reforms and the implications of going further.
The government is very conscious of concerns raised by the Productivity Commission and others about the effects on competition of a change to a borrower pays model.
The government is confident that the actions we have announced will put in place the legislative framework necessary, providing the regulators with the powers and the resources to hold those who abuse our trust to account. In doing so the community’s trust in our financial sector can and will be restored.