The national peak body representing finance and mortgage brokers says the royal commission has failed to understand the role of mortgage brokers and the competitiveness they bring to the market following its recommendations to eliminate trail commissions for brokers, which the Government has implemented from July next year.
Managing director of the Finance Brokers Association of Australia (FBAA), Peter White said today should be the day of reckoning for big banks who have spent far too many years putting profits above people, yet the result of eliminating trail commissions could realistically mean interest rate hikes.
“This could force up-front commissions to rise in order to compensate for reduced revenues to brokerages, which in turn will lift interest rates and make housing affordability more difficult,” he explained.
He also slammed the recommendation to eliminate up-front commissions, and congratulated the Government for not reacting to this.
“Commissioner Hayne wants to hand even more power to the big banks and eliminate competition, which is a ridiculous scenario and shows just how out of touch he is when it comes to brokers.
“If a user-pays model was implemented, we know that most borrowers wouldn’t pay, and banks would make more money and standards would drop further.
“It’s very disappointing that the royal commission wants to destroy some 20,000 small businesses for the monetary gain of the big banks, and we trust the Government will see clearly on this and continue to work extensively with our industry to improve consumer outcomes.”
Mr White said borrowers trust and support brokers.
“There is a reason why over 59 per cent of loans are written through brokers. Customers have no issues with broker commissions.
“Customers get a better outcome by using a mortgage broker. They get better service, more choice and a well trained finance expert to take them through what is a massive and stressful time of their life,” he said.
He also pointed out that the broking sector was well already ahead of the game, having been through reviews from ASIC and the productivity commission.