Consumer groups ask Canberra to move quickly on bank payments to mortgage brokers
Consumer groups have quit en masse from a mortgage broking industry forum, saying that the industry isn’t interested in doing the right thing by the community and has been disingenuous.
CHOICE, Consumer Action Law Centre, Financial Counselling Australia and Financial Rights Legal Centre have removed consumer representatives from the Combined Industry Forum, an industry initiative to discuss reforms to the mortgage broking sector. The sector has been in discussions for years but has failed to address concerns about commissions or grapple with calls for brokers to act in the best interests of their clients.
Mortgage broking lobbyists continue to swarm on Parliament House in an attempt to derail crucial recommendations from the Royal Commission Final Report, showing the sector cannot be trusted to stand up for everyday home owners when it comes to reform.
The groups are calling on Canberra to implement the original recommendations from the Royal Commission to:
- Make mortgage brokers act in the best interest of their clients.
- Stop trail commission payments to brokers that continue for the life of a home loan and do not guarantee ongoing services.
- Phase-out up front commissions paid by lenders to brokers for recommending their loans
Quotes attributable to Alan Kirkland – CEO, CHOICE
“We joined the mortgage broking industry’s Combined Industry Forum because we were willing to believe their commitment to reform. Instead, we have been locked in discussions with them for years, with no progress on introducing a best interests duty for brokers or removing conflicts from the sector. It took a Royal Commission to get a decent plan for reforming the sector.”
“With many members of the forum now backing the mortgage broking lobby’s political campaign against the royal commission reforms, it is clear that they are only interested in blocking meaningful change. Commissioner Hayne made it clear that upfront and trail commissions create unacceptable risks to consumers and we can’t be part of any process that fails to acknowledge this.”
Quotes attributable to Karen Cox – CEO, Financial Rights Legal Centre
“Commissions and conflicts of interest have harmed people wherever they’ve appeared in the finance sector. Consumers have paid too much, for too little, too long.”
The mortgage broking lobby wants us to believe that they can continue to act for a customer while being paid by the banks to recommend loans, but ASIC, the Productivity Commission and now a Royal Commission have called them out. We need our politicians to act in the best interests of consumers – we need our politicians to be brave and stand up against industry lobbying tactics and overblown claims.”
Quotes attributable to Gerard Brody – CEO, Consumer Action
“We’ve left the CIF because the mortgage broking industry has demonstrated it is not interested in doing the right thing by Australian home owners. Instead they’re pressuring politicians to ignore the recommendations of the Royal Commission. The banks would be the big winners if commission payments continue, as it will only serve to siphon more loans to their books.”
“The Royal Commission recommendations were crystal clear: we need to ban conflicted remuneration and get rid of loopholes in the law that have allowed problems in this sector to thrive.”
“As long as brokers get paid by the banks, they work for them rather than customers.”
Quotes attributable to Fiona Guthrie – CEO, Financial Counselling Australia
“Buying a home is one of the biggest decisions someone can make. It’s essential that any advice is given with a consumers’ best interest in mind. Removing conflicts is the only way to make sure that someone buying a home gets genuine advice about the best option for them.”
“We wished to engage with the CIF in the hope of implementing solutions that consumers need for a competitive and fair financial services market. Consumer groups remain willing to work on reform and expect to continue discussions through forums with government and regulators.”
Media contact: Jonathan Brown 0430 172 669