The new broker remuneration model introduced by publicly-listed mortgage broking and financial planning house, Mortgage Choice passed its first test this week with the company’s first half results confirming earlier earnings guidance of with a 44 per cent decline in profit to $6.388 million.
The result followed the new broker remuneration model having been in place for five months, with the company’s chief executive, Susan Mitchell explaining that it paid franchisees more whilst reducing their income volatility when the market slowed.
However, she said settlement volumes had been impacted by the slowing property and home loan market and that uncertainty surrounding the Royal Commission recommendation had added to the situation.
Mitchell said the company was supportive of the Royal Commission’s recommendation to move to best interests duty for mortgage broking, noting that such a duty applied to the Mortgage Choice Financial Planning business, “so operationalising these changes will be manageable”
“In response to the Royal Commission recommendations, both sides of federal politics have recognised the importance of a sustainable mortgage broking industry to maintain competition in the home lending sector,” she said. “Mortgage choice is calling for both sides of government to initiate a consultation process with the industry.”
On the financial planning side of the business, the company’s report to the Australian Securities Exchange (ASX) said financial planning funds under advice (FUA) rose 28.8 per cent to $816.9 million and that financial planning insurance premiums in force rose 8.5 per cent to $28.9 million.
Looking at the immediate future, the company’s statement said that the uncertainty surrounding the Royal Commission outcome made recruitment of new franchisees difficult but claimed Mortgage Choice was well placed to be an aggregator of choice once the uncertainty subsided.