Despite some evidence given to both the Royal Commission and a Parliamentary Committee of Inquiry a key mortgage broking group is urging the retention of both upfront and trailing commissions.
The group, the Mortgage Brokers Forum (MBF), has produced a report recommending the retention of upfront and trail commissions, claiming the structure provided a strong incentive for mortgage brokers to put customers in the right loan the first time and promoted competition.
It said that both borrowers and lenders relied on mortgage brokers and maintaining the current commission structure was the best way to keep interest rates low.
However, the same report has seen the MBF recommend the adoption of a licensing system in the mortgage broking industry similar in character to that which applies in the financial planning industry.
The report has recommended the creation of Registered Credit and Compliance Holders (RCCH), which would continue to aggregate mortgage brokers and lenders but also be responsible for the behaviour and compliance of its aligned mortgage broker network with each RCCH to be supervised by the Australian Securities and Investments Commission (ASIC).
“An RCCH would help ASIC do its job of supervising the mortgage broker industry, helping achieve better outcomes for customers,” according to founder of Yellow Brick Road and member of the Mortgage Broker Forum, Mark Bouris.
“Aggregators would play an expanded role in the sector by holding the umbrella license and ensuring its licensees comply,” he said. “Mortgage brokers would become more accountable for their decisions.”
“The change would help ensure a healthy mortgage broker industry, which is critical to keeping the home lending market competitive. More than half of all mortgages, worth around $200 billion a year, are organised through mortgage brokers,” he said.