Lenders and aggregators are throwing their support behind the MFAA’s recently-launched campaign to defend mortgage brokers.
The campaign encourages Australians to search for their MP and write a letter of support for the industry.
Non-bank mortgage provider Resimac has backed the ‘Don’t Kill Competition’ campaign which opposes the proposed ban on broker commissions paid by lenders.
The industry was shaken last week after the Royal Commission final report was released, recommending the complete abolition of trail commissions followed by the removal of upfront commissions, to switch to a borrower-pays structure.
Treasurer Josh Frydenberg has said the government will remove trail commissions from 1 July 2020, and hold a review after three years to assess the impact of such a drastic change.
Resimac chief executive Scott McWilliam said that mortgage brokers are an essential component of the ecosystem of the mortgage industry.
“Brokers provide consumers with access to loans from the big banks as well as smaller lenders without a branch network and accordingly stimulate competition within the lending market,” he said. “The health of the broking sector is vital in achieving the best outcomes for home loan borrowers.”
The MFAA recently released data showing that 59.1% of home loans were introduced by mortgage brokers, but has warned the broking sector is under threat as a result of the proposed changes.
Along with a number of other lenders including the major banks, aggregators and brokerages, Resimac contributed to the Combined Industry Forum (CIF) package released in December, proposing changes to remuneration be made in the interests of the customer.
“We support the six principles of the CIF package which includes a carefully managed up-front commission structure,” McWilliam said.
“This approach achieves better customer outcomes and improved standards of conduct, while continuing to promote competition in the Australian mortgage market.”
McWilliam said Royal Commission scrutiny had led to big banks having a greater focus on responsible lending which has resulted in tightening of lending policies.
“This ‘Royal Commission effect’ has levelled the playing field by requiring big banks to operate to the more stringent standards already observed by non-banks and smaller mortgage lenders.
“However, the proposed changes threaten to reduce competition in the mortgage industry, penalising consumers who could end up paying more for mortgages.”
McWilliam urges lawmakers to think carefully about the consequences of changes. “Anything that diminishes competition or reduces consumer access to a wide range of mortgage options would be detrimental to ordinary Australians,” he said.
Resimac has advised that it will be issuing a communication to its customers to draw attention to the matter, referring them to the MFAA-led petition at www.brokerbehindyou.com.au.
This article first appeared in our sister publication Australian Broker.