AFG restructure aims to improve broker image

Mortgage broking group AFG is restructuring its executive bench to give more prominence to regulatory and industry engagement.

Mark Hewitt becomes general manager industry and partnership development at AFG. Picture: Ross Swanborough

Mortgage broking group AFG is restructuring its executive bench to give more prominence to regulatory and industry engagement, after the intense scrutiny of the Hayne royal commission.

The broking industry dodged a bullet with the re-election of the Morrison government, but AFG is mindful of a three-year review into the sector’s commission payment model.

In a statement to be released to the ASX today, AFG will announce general manager residential and broker Mark Hewitt moves to the newly created post of general manager industry and partnership development. The position will cover all lender and stakeholder relationships.

“The external forces impacting our business across the past 18 months have underlined why it is crucial to constantly engage with the broader industry and continue to position AFG as taking a leadership role in the market with both regulators and our lending partners,” chief executive David Bailey said.

“With the three-year review period now under way, the need for AFG and the industry more widely to represent our brokers positively in the eyes of regulators and government is even more important. Mark will focus on our engagement with regulators and work to drive positive change across the industry.”

In his final report, commissioner Kenneth Hayne recommended consumers pay a fee for the services of mortgage brokers, rather than banks paying commissions to brokers for loan ­referrals.

The recommendation caused a stir in the broking industry and prompted a widespread lobbying campaign, which later saw the Morrison government back away from its stance on banning commissions. However, it did call for several additional protections, including that brokers were bound by an obligation to act in their customers’ best interest.

That was along with a review of trail commissions in three years, overseen by the Council of Financial Regulators and Australian Competition & Consumer Commission.

The Labor Party had proposed an initial step to scrap trail commissions, earned annually by brokers over the life of a mortgage, while increasing upfront payments. That was before moving to a fee-for-service model.

“While we have done a tremendous job in reminding regulators, politicians and the broader community of the vital role our industry plays in delivering a competitive lending market, we must ensure that the broker proposition remains front and centre,” Mr Bailey said.