The Treasurer, The Hon Josh Frydenberg MP, has released the Royal Commission’s final report from the Inquiry into Misconduct in the Banking, Superannuation and Financial Services Industry and with it, the government’s response. The government has agreed to take action on all 76 recommendations made by Commissioner Hayne.
The Coalition Government recognises the contribution the mortgage broking sector makes to competition. Mortgage brokers provide consumers more choice when it comes to obtaining a mortgage and support smaller lenders who are otherwise unable to compete with the big banks. This government understands the importance of certainty for the thousands of small businesses that employ over 25,000 people in the mortgage broker sector.
The Coalition Government wants more mortgage brokers not less. Mortgage brokers are an integral part of Australia’s financial system. It is this government that will work in partnership with the mortgage broking industry to make the sector stronger, not weaker.
The government’s 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.
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. It is disappointing that the Opposition and Mr Shorten are yet to offer a similar assurance.