Australian Finance Group Ltd (ASX:AFG) said the Federal Government’s announcement on trail commissions today confirmed the vital role mortgage brokers play in generating competition in the home loan market.
In response to the Banking Royal Commission recommendations, Treasurer Josh Frydenberg said the Government had decided not to prohibit trail commissions on new loans and opted to review their operations in three years.
AFG Chief Executive Officer David Bailey said “We welcome the Government’s considered approach and urge the Labor Party to adopt this sensible policy heading into the election.
“We have seen an understanding from both the Government and Labor that mortgage brokers provide vital competitive pressure in home lending, by writing close to 60 percent of all home loans.
“It’s important that our industry not be a political football heading into an election so that the 26,000 small businesses, their families and, importantly, their customers have certainty about the future of the sector.
“We welcome the fact that there’s been a broad understanding of the essential service that our industry provides and the need to maintain that ongoing service for our customers. Like the Government, Labor has also recognised the importance of the industry and it’s vital we go into the election with bipartisan policy.”
Mr Bailey noted that since the Royal Commission report was released, we have seen more and more respected economic advisers – from the head of the RBA to the head of Treasury – warn about the implications of poor policy that damages the sector. And the heads of the major banks have acknowledged the competition that mortgage brokers bring to the home loan sector.
“A well-regulated, viable mortgage broking industry is vital to competition. A wrong move will hand the big banks big profits at the expense of brokers, the non-major lenders and every Australian borrower.”
AFG will continue to work with the Government and the Labor Opposition to ensure a considered policy approach to the Royal Commission recommendations to avoid any negative impact from policy proposals.