Member for Blair, Shayne Neumann MP, has welcomed Labor’s response to the Royal Commission’s recommendation in relation to mortgage broker remuneration, which will achieve the objectives set out by the Royal Commission, but in a way that does not harm competition in the mortgage market.

Following the Final Report of the Banking Royal Commission, Labor outlined its full response.

Mr Neumann said that Labor appreciates that many mortgage brokers deliver their services with distinction and serve their clients faithfully. 

“Unfortunately, we have seen some examples through the Royal Commission where some mortgage brokers have not provided services or advice in the best interests of their clients,” Mr Neumann said.

Labor’s approach to the Royal Commission’s recommendation in relation to mortgage broker remuneration will achieve the objectives set out by the Royal Commission, but in a way that does not harm competition in the mortgage market.

“Labor will deal with the Royal Commission’s key concerns with mortgage broker remuneration, namely conflicted remuneration and incentives that drive higher average loans sizes that may not be in the consumer’s best interests. 

“Labor will impose a fixed percentage upfront commission for brokers that will eliminate the conflict of interest that comes from different lenders offering different commission rates, while ensuring these upfront commissions can only apply to the amount drawn down by the borrower, not the total loan amount.

“An industry view is that the fixed percentage upfront commission rate should be 110 basis points and so Labor will use the Banking Royal Commission implementation taskforce to consult with industry and consumer groups on the appropriate rate.

“We will also abolish trail commissions from lenders to mortgage brokers and aggregators on new loans from 1 July 2020 as well as banning volume-based commissions and ‘soft dollar’ payments being offered to brokers by lenders.

“Labor called for this Royal Commission, Labor fought for this Royal Commission, and Labor will work day and night to ensure that we deliver the reforms recommended by the Royal Commission.

“Scott Morrison and the Liberals simply cannot be trusted to stand up to the big banks,” Mr Neumann said.