The mortgage broking industry has gone into damage control after the interim report of the royal commission launched a broadside on the upfront and trailing commissions that underpin the economics of the industry, suggesting its final report could eradicate the payments on the basis they create conflicts of interest.

The CEO of the Mortgage & Finance Association of Australia, Mike Felton, said the limited terms of reference for the inquiry meant implementing any recommendation to limit broker commissions would have "unintended consequences" by reducing competition in the $1.6 trillion home loan market.