May 26, 2016
Mortgage Choice chief executive officer John Flavell has made it clear he strongly supports the Australian Securities Investment Commission's (ASIC) Review of Mortgage Broker Remuneration Structures, with the industry regulator unveiling its Final Scoping document this week.
“At Mortgage Choice, we thoroughly support ASIC's Review. The objectives of the enquiry should be to deliver better consumer outcomes, and anything that serves to do that and drive greater transparency should be applauded,” he said.
“Earlier this week, we were provided with ASIC's Final Scoping document, which sets out the parameters for their Review. From this, we know exactly what aspects of the industry ASIC plan to review and we welcome it.
“I believe their Review will highlight the tremendous job this industry does for consumers each and every day.
“There is not another industry that has done as much for Australian consumers as the mortgage broking industry. Prior to the introduction of mortgage broking, Australia had the highest interest rates in the Western world.
“The emergence of mortgage broking brought with it increased lender competition, smaller bank margins and lower interest rates – all of which was great news for consumers.
“Mortgage brokers also forced Australia's lenders to become more innovative in terms of home loan products and mortgage features.
“Today, thanks to the introduction of mortgage broking, Australia boasts one of the most sophisticated mortgage markets in the world both in terms of product innovation and product pricing.
“And, for all that mortgage brokers do, they are remunerated for their services. At Mortgage Choice, we support the need for transparency when it comes to commissions, especially when you now consider that mortgage brokers are responsible for more than 53% of all loans written in Australia.
“Borrowers have the right to know what their brokers are being paid by their lender, and how that level of remuneration may differ from lender to lender.
“Of course, we don't just support the need for transparency - we live it. At Mortgage Choice, we educate customers on how brokers get paid and ensure they understand that our brokers are paid the same rate of commission regardless of which home loan product a customer chooses from our panel of lenders.
“We strongly believe that the mortgage broking industry will benefit from this Review.
“And while ASIC's Review of Mortgage Broker Remuneration Structures will investigate the way this industry is recompensed, it is important to note that the investigation boasts a broader scope than purely broker commissions.
“All parties associated with the mortgage industry will be reviewed and we believe this is an appropriate line of enquiry. Mortgage Choice has happily worked with the industry regulator throughout the initial stages of their Review and we will continue to collaborate with them over the months ahead.”