The FBAA has made progress in its fight against broker clawbacks with the Federal Opposition agreeing to discuss a review if elected.
“The FBAA has been campaigning against the grossly unfair clawback system for many, many years,” FBAA managing director White (pictured) said.
“We’ve been vocal, and we’ve been dogmatic. We’ve never wavered from our commitment to see a change and we won’t stop until it happens.”
White sat down for a webcast interview with Labor’s shadow financial services minister Stephen Jones on Friday to discuss broker remuneration, including clawbacks.
Labor recently announced it would not make any changes to broker remuneration should it win office. Jones also confirmed that the party would not be pursuing the now dropped 2022 broker renumeration review.
White was excited to announce that Jones had committed to meet with him and other industry leaders and lenders if Labor wins government to discuss reviewing clawbacks and consider to limiting them to one year.
“This is across all clawbacks impacting all consumer lending, not only mortgages,” White said.
“I don’t want to overstate this, as there is a long way to go and a lot of work to do. But equally I can’t understate it, as never before has a financial services minister or shadow agreed to start the conversation. It is a historic conversation that is potentially industry changing.”
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Jones said it was important that Labor and the industry has that dialogue.
“I will be coming to it with the principle that a broker should be fairly remunerated for the work they perform,” Jones said.
“In a fairly concentrated lending market, brokers play an important role in ensuring consumers have access to the best deals and the best rates. We want to ensure brokers are able to make a fair profit for the work they perform because in the market like the Australian market, we need brokers to operate.”
White said in order to continue this process, the FBAA had additionally provided Labor with a research paper it had just completed containing data that strong supported the case for the clawback review.
“I am expecting strong push-back from the banks but I believe we are on solid ground and we won’t be giving up,” White said.
“I am pleased that the shadow minister and his advisers are supportive of brokers and have in fact used brokers themselves.”
White said he was also contacting Assistant Treasurer Michael Sukkar to find out where he and the Coalition stood on the clawback conversation and would provide him the same data.
“Our goal is to obtain a similar commitment. As always, the FBAA will continue to push forward on your behalf, and I believe our industry is in a good position coming into the election,” he said.
White said he had been in regular contact with senior ministers and shadow ministers on both sides of parliament and it was rewarding to hear Jones specifically point this out and thank the FBAA for its dialogue over the years following the Hayne Royal Commission.
“He confirmed that it was the submissions from the FBAA along with our supporting data that enabled him and the Opposition to make the important decision which is that Labor will be making no changes to broker remuneration should they win office,” he said.
Jones said one of the things that seemed clear to him is we did not have anything fundamentally broken in the remuneration system for mortgage brokers.
“I think the commission-based remuneration arrangement is the right model,” Jones said.
“It’s working at the moment. The structure of commission-based remuneration is right,” he said.
“We want brokers to be focused on their clients and not on when the next financial or regulatory hit is going to come from the Commonwealth.”
Jones wanted brokers to focus on their clients in a difficult environment and not on Canberra.
“Let’s make it crystal clear, there will be no change to the commission-based remuneration arrangements,” Jones said. “We won’t be proceeding with that review. We will keep those arrangements in place.”
White said this matched the commitment from the Coalition government, meaning that whoever wins government understood the needs of the industry, and it can have confidence moving forward.
