Brokers and others working in loan finance have welcomed the news that a government review of broker trail commissions has been dropped.
Federal Assistant Treasurer and Minister for Housing Michael Sukkar announced late on Friday that the 2022 review of mortgage broker remuneration, which was to be conducted by the ACCC and the Council of Financial Regulators, was no longer being pursued.
Australian Broker caught up with Far North Queensland-based broker John Contarino (pictured), the winner of Regional Broker of the Year at the 2021 Australian Mortgage Awards, and Dino Pacella, head of third-party relations at commercial finance broker platform Marketplace Finance and founder of National Finance Brokers Day.
Contarino said halting a review of broker trail commissions was a win for brokers across the country.
“In regional and rural areas, brokers are filling market segments the banks are no longer filling. With two out of three home loans now signed with brokers, banks are moving away from these areas and are changing their services,” said Contarino.
He said across regional Australia it was easier for a rural customer to meet with a broker than see a lender in a bank, given many branches had closed down.
“Brokers are becoming an essential service for rural and remote customers, and they provide a very good service in these areas,” he said.
With the property market booming in regional Queensland, Contarino and his team understand that properties are not sitting on the market long, and it is getting harder for people to buy into the market.
“The importance of a reliable and supportive broker is more important now than ever before,” Contarino said.
Brokers and industry leaders, including the MFAA, FBAA and broker aggregator AFG, are applauding the federal government’s move to halt the review of broker remuneration, given that the banking royal commission had established a principles-based best interests duty (BID) obligation for mortgage brokers alongside remuneration and governance reforms.
“This is a positive outcome not only for the broking industry, but also for the Australian consumer. It is a true testament to the thousands of industry professionals who bring a personalised service approach to the market, much-needed competition, and extreme value,” said Pacella.
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He said the decision to drop the review outlined the hard work brokers and associated professionals were doing in the industry.
“Consumers are benefiting from this channel and is evidenced with two out of three mortgages now being written by a broker,” he noted.
Pacella said the government’s decision to drop the review would make more people look to a career as a broker, knowing the industry was regulated and that it aimed to attract committed people looking for a long-lasting career.
“The comfort of knowing the remuneration structure is supported by government, associations, and aggregators alike is like pouring the concrete slab when building a home,” he said. “The foundations need to be solid, and the industry has created this. The consumer market is seeing this through their experiences when using a broker.
“Consumers now know that finance brokers understand how to get a loan done and have it completed in the client’s best interest.”