ASIC, MFAA and FBAA issue hurried responses to banks’ move away from percentage-based commission
Industry associations have reacted to a decision by several banks to move away from percentage based commissions. ANZ, CBA, NAB and Westpac have promised by 2020 to fully implement the recommendations of the Sedgwick Review, introducing broker remuneration which is not linked directly to loan size.
Responding to the Review itself, MFAA CEO Mike Felton said he was ‘frustrated’ with the Review, which: “in essence recommends a consolidation of power to lenders, giving them complete oversight of mortgage brokers.” Talking to MPA later about the banks’ vow to implement Sedgwick’s recommendations, Felton noted that “a number of the changes that have been suggested are of concern” and that brokers “have cause for concern”.
The Sedgwick Review
1. Separate from ASIC's Review into Mortgage Broker Remuneration
2. Independent but financed by the Australian Bankers Association
3. Final Report released this week, advocating major changes to commission by 2020
However FBAA executive director Peter White said the Review would cause “nothing that could damage [brokers’] livelihoods…at the end of the day we don’t come under the auspices of the ABA or the Sedgwick Report; our relationship is with ASIC and the ministers, in conjunction with Treasury’s stakeholder consultation period. We will continue to stay very strong and firmly planted in that.” The MFAA has also urged banks to stick to Treasury’s consultation process following ASIC’s separate remuneration review and avoid unilateral action.
ASIC’s senior executive leader Michael Saadat, speaking to MPA, said ASIC was “pleased that industry is working to improve remuneration structures to create better outcomes for consumers”, whilst encouraging all industry participants to get involved in the Treasury’s process. Nevertheless, he indicated that banks could changes remuneration unilaterally: “these are obviously commercial arrangements and it’s up to both individual banks, aggregators and brokers businesses to work out what those arrangements should be.”
Saadat insisted ASIC had not shared any data with the Sedgwick Review. Asked whether ASIC could play a greater role in pushing through commission changes, as Sedgwick suggested, Saadat responded that “ASIC's ability to intervene may also be bolstered by law reform proposals that are currently being considered by Government, including those recommended by the Financial System Inquiry.”
Read more about the Sedgwick Review: https://www.mpamagazine.com.au/sections/market-talk/banks-vow-to-end-percentagebased-commission-235376.aspx