“There’s a lot of regulatory change coming down the line and most of it’s [our] own goal, unfortunately. I think as an industry, we’ve lost the social right to make money and we need to earn that back.”
These thoughts were given by Suncorp CEO of banking and wealth David Carter in a panel discussion at the Synergy Business Partners Summit 2017 in Sydney yesterday (24 October).
“It’s very clear that we don’t meet the expectations of stakeholders.”
Current levels of regulation were not too heavy for mortgage brokers, he said, in that self-regulation still exists without hard regulation imposed by the government.
“The key question is how do you make sure that you maintain the right to be self-regulated? By making change progressively so that perceptions around culture and conduct don’t cause intervention.”
Carter touched upon one of the key regulatory issues of the moment, ASIC’s investigation into broker remuneration, saying that the general commission structure would not be changed in the future.
“Politically from either side of Parliament right now, no one’s going to vote for the major banks to get more power any time soon.”
However, he advocated for change in transparency around commissions to remove conflicts of interest on soft dollar incentives, ownership structures, etc.
“We support those sorts of changes because we don’t want to see mortgage broking end up in the same place as financial planning and financial advice has found itself. I think that would be bad for consumers and customers. It would reduce choice.”
Commissions were a better model than flat fee structures, Carter told
Australian Broker.
He predicted that the balance between upfront and trail will be under review especially as loan durations decrease and the cost of originating loans is on the rise.
“We’ve just got to be careful that upfront isn’t at a level where it incentivises – directly or indirectly – people to borrow too much money.”
While he acknowledged that consumers were adults responsible for their financial decisions, he also noted that legislation puts the onus on the lender to ask the right questions during the application process.
“Part of the [ASIC] review hopefully will address some of the shared responsibilities of all the parties to the transaction. Having said that, the lender needs to satisfy themselves that the borrower’s borrowing for the right purpose, isn’t going to get themselves into trouble paying it back, and has the need that is stated.”
The Synergy summit is a nationwide event run by Suncorp Group and brings together industry representatives from Suncorp, Vero and Asteron Life.
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