Brokers fear reputational damage following Royal Commission

More than 65 per cent of mortgage brokers said they were seriously or moderately concerned that the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry would negatively impact the reputation of their industry.

Thirty-seven per cent of brokers were in support of greater industry scrutiny by the Australian Securities and Investments Commission (ASIC) as the regulator turned its focus to lending standards in the industry.

Seventeen per cent said that while the greater focus would be unfortunate, it was self-inflicted “as there were rogue mortgage brokers in the past that damaged the industry’s reputation.”

Twenty-eight per cent said the scrutiny was just a “political exercise designed to benefit non-broker interests” while 35 per cent said they were undecided as to whether reputations would be tarnished.

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Forty-two per cent of brokers said the recent draft Productivity Commission report was unlikely to lead to the replacement of broker commissions with a fee-for-service mode, while 23 per cent thought it was a strong possibility.

MyState Limited Group executive broker distribution, Huw Bough, said the survey results showed that while brokers held concerns for their reputation, they remained supportive of improving the industry standards.

“The Royal Commission has attracted a lot of attention recently, but it must also be acknowledged that well before the commission began, representatives of Australia’s mortgage broking industry prepared a landmark reform package to improve customer outcomes and confidence in mortgage broking,” he said.

The reform package involved six principles to ensure improved standards of conduct and culture, while preserving competition in mortgage broking.