SA mortgage brokers have met in Adelaide to campaign against royal commission proposals

Mortgage brokers from across Adelaide met with Federal Government figures in the city today, vowing to take up the fight against proposals from the banking royal commission.

Marissa Schulze from Rise High Financial Solutions. (AAP/ Keryn Stevens)

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Mortgage brokers from across Adelaide met with Federal Government figures in the city today, vowing to take up the fight against proposals from the banking royal commission.

Assistant Minister for Treasury and Finance Zed Seselja, SA Liberal Senator Anne Ruston and Liberal candidate for Adelaide Shaun Osborn attended the meeting, where they heard from brokers and their clients about concerns around proposed changes to broker remuneration.

The Federal Government has accepted the royal commission’s recommendation to ban trail commissions, which it will implement from July 2020, and has committed to holding a review in three years on the merits of shifting to a borrower-pay system.

At today’s meeting Australian Finance Group (AFG) chief executive David Bailey, who heads one of the country’s largest broking groups, called on the local industry to back a campaign against a blanket ban on broker commissions paid by lenders.

“We really need to use this time to get active, to tell our stories, to get people understanding what we do, to clarify and dispel the myths about what we do - that we do nothing for our trail, that we sit back and take money for nothing,” he said.

“This is the start of an opportunity to start educating - we need your voice, we need your customers’ voice. It’s really important to harness all that energy and all the positive things that you guys provide and send the message.”

Federal Labor says it will adopt the royal commission’s proposal on broker remuneration in full, including the introduction of a borrower pay system where clients pay brokers upfront for the costs involved in advising on and arranging their loans.

Senator Seselja said there was a “fundamental” difference in the approaches taken by the two major parties.

“I agree it may well be a significant election issue,” he said.

“Labor very quickly adopted the entirety (of the recommendation) - Josh Frydenberg on behalf of the government took a very different approach.

“The Treasurer made it clear in his response that this has been looked at by other studies, particularly the Productivity Commission, and in all likelihood it would lead to a lessening of competition and lead to obviously more of a concentration with the big banks.

“Based on what the Productivity Commission had to say, and a few others had to say, that likely means that people’s mortgage rates will be higher, because given the reluctance to pay an upfront fee, most people are going to go back to their banks, the ones they know.”

Rise High Financial Solutions founder Marissa Schulze said a client pay model would push the broker service out of reach for many Australians.

“The current remuneration model makes it an even playing field between banks and mortgage brokers, allowing all Australians the ability to choose which channel will support them best without having to pay more for choosing a mortgage broker,” she said.

“This is essential to ensure that the people who need our services most are not disadvantaged due to cost barriers.”