UPDATE – Banking Royal Commission

Written by Andrew Pribil (Managing Director – A&C Finance Group)

In February, I published an article outlining the implications of the recommendations from the Banking Royal Commission. This was largely pertaining to how prospective changes to mortgage broker remuneration would impact the broader home loan market.

I am pleased to be able to provide an update that is wholly positive.

Whilst Commissioner Kenneth Hayne’s recommendations included the removal of upfront and trail commissions for mortgage brokers, we can now confirm that the re-elected Coalition government has advised they won’t be making any alterations to how mortgage brokers are paid.

Both political parties agreed that Hayne’s proposal for mortgage brokers to charge an upfront fee was nonsensical, as it basically entrenched the major banks’ oligopoly, removing all of their competition from smaller lenders.

Without getting too political, Labor still went to the election maintaining trail commissions should be removed, instead planning to increase upfront payments slightly to minimise the financial impact on the broking industry. Whilst not as dire to the industry as what Hayne recommended, it would have encouraged makeshift businesses to join the industry and potentially non-compliant behaviours that often accompany anyone with a short term lens. It also would have reduced the income of established businesses by around 25%.

The Coalition went to the election advocating for the existing model, confirming no financial changes would occur if re-elected. This result now means competition for business remains buoyant and the major banks will be kept honest around their pricing decisions.

We would like to take this opportunity to thank all of our loyal clients who reached out in support of us; it was truly appreciated during a challenging time. I’d like to think that all of the lobbying contributed in a small way to this outcome. I can assure everyone that I have now officially withdrawn my application for employment at McDonald’s, and we will continue to assist clients with their lending needs. I don’t think my “do you want fries with that?” was really up to scratch anyway.