As I am sure you are by now aware ,the ASIC Broker Remuneration report was released last week. This is an important milestone for our industry and the PLAN Australia team has been preparing for the release for some time now. We’re now in the process of analysing the report and summarising our key findings.
A copy of the report can be found here: ASIC review of mortgage broker remuneration.
ASIC makes six proposals in their report which are for consultation with our industry. These proposals aim to improve customer outcomes and include:
- Changing the standard commission model to reduce the risk of poor customer outcomes
- Moving away from bonus commissions & bonus payments which increase the risk of poor customer outcomes
- Moving away from soft dollar benefits which increase the risk of poor customer outcomes and can undermine competition
- Clearer disclosure of ownership structures within the home loan market to improve competition
- Establishing a new public reporting regime of customer outcomes and competition in the home loan market
- Improving the oversight of brokers by lenders and aggregators.
There is a significant amount of detail and analysis included in the report which forms the basis from which these proposals have been made.
Importantly, our initial review of the report has noted positive messages with respect to the broker channel. Brokers are providing effective support for customers who are making important financial decisions. Page 8 of the report, in particular talks to this. There is a much greater propensity for customers to use brokers than there has been in the past. This highlights the important role you play in the home loan market. The report found ‘For consumers who had recent experience with a broker or who intended to use a broker in the near future, almost 60% considered that the broker could get them a better deal than going directly to the lender.’
The report is an important milestone in our industry. It reflects the industry’s growth and maturity and the value brokers bring to their customers.
ASIC also recommended that these proposals be implemented before a further review of the market is conducted in 3 to 4 years’ time. This second review would determine whether additional changes were required. This review cycle is a good thing for our industry – it indicates maturity, and for consumers – it ensures we’re all focused on doing the right thing.
We will now enter a period of public consultation. We’ll be working with our members around the PLAN Australia response. Final submissions are due to Government on 30 June 2017. We expect the Government to make decisions on what action they want to take toward the end of 2017.
We will provide regular updates once we have completed our analysis of the report and will summarise our key findings for you.
If you have any questions or concerns, email us at PLAN.email@example.com.