The Royal Banking Commission released an 18-page background paper on Thursday (22 February) that delves into the mortgage broking sector, suggesting that brokers will be a key area of focus during the commission’s next public sessions in March.
Mike Felton, CEO of the MFAA, says this doesn’t come as a big surprise. The commission announced at its first public session in February that home loans, car loans and credit cards would be first to undergo scrutiny.
“The mortgage broking market is systematically important to the Australian economy and the home loan sector, so it’s not surprising it will form part of the initial home loan review,” Felton said.
Peter White, executive director of the FBAA, also understands why the broking industry will be in the spotlight first. “It's the largest debt and it's the largest asset ... but it's not the totality of the market,” he said. But he added that it doesn’t matter what is pointed out about the industry, those who want to find something negative in the background paper probably will.
No need to worry
As Felton often likes to point out, the industry has already been through two significant reviews in the past 18 months, neither of which found systematic poor outcomes or systematic harm to consumers. Felton believes that this will put the mortgage industry in good stead as the commission’s hearings get underway.
The commission is also not supposed to interfere with matters that are already in progress, such as ASIC’s remuneration review.
The commission will likely focus on remuneration, transparency, culture and governance to find out if the mortgage industry is producing good customer outcomes, Felton said. And those issues are exactly what the industry has been working hard to address through the Combined Industry Forum (CIF).
“The CIF has spent a significant amount of time looking at remuneration, disclosure and governance, and is currently implementing a package of significant reforms to improve the standard of conduct and culture that aims to improve customer outcomes,” Felton said.
“It’s a good time for our industry to be responding.”