The head of a major mortgage franchise believes the broking industry has little to fear after the Australian Securities & Investment Commission announced it would hold an inquiry into remuneration structures.
Mortgage Choice chief executive John Flavell believes the industry has “nothing to hide” and will be vindicated by the inquiry.
“We also support the need for a well-regulated, highly educated industry, which is why we welcome the opportunity to have informed interactions with the regulator in order to deliver the best outcomes for the end customer,” Flavell said in Your Investment Property Magazine’s sister publication, Australian Broker.
“We strongly believe the third party distribution channel has nothing to hide and an inquiry into the industry will only serve to prove this point,” he said.
While he believes the inquiry won’t unearth any inappropriate behaviour, Flavell said it is fair for borrowers to get an understanding of how brokers are remunerated.
“…[F]or 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 almost 60% of all loans written in Australia,” he said
“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.”
While he welcomes the inquiry in some aspects, Flavell said brokers should be given some recognition for the benefits they have helped deliver to borrowers over the years.
“When mortgage brokers made their market debut, lenders were forced to basically drop their home loan rates overnight,” he said.
“In addition to lender competition, mortgage brokers have been responsible for driving home loan innovation and giving borrowers the right to choose the best product and lender for their needs.”
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