Monday, July 16, 2018
Knowledge Portal Articles Has Mortgage Broking Dodged a Bullet?

Has Mortgage Broking Dodged a Bullet?

Thinking of a career in broking but worried about the banking Royal Commission? Don’t worry, the Commission’s impact on broking will be limited.

At first glance, the banking Royal Commission is bad news for mortgage brokers. But when you look at the Commission’s mandate it is clear that its main focus will be on other banking sectors.

Financial planning and superannuation is more likely to be in the Commission’s cross-hairs.

Thankfully, because mortgage broking has recently been subject to a number of other enquiries, it is likely to be less scrutinised.

The recent ASIC enquiry into the mortgage broking industry is likely to result in some modifications in commission structures. But it appears that, because the industry is going about genuine self-regulation, it is likely to avoid the government regulation.

Early next year the Productivity Commission releases its reports on trail commissions, white label lending and even the NCCP Act as part of its inquiry into competition in the financial sector.

Thankfully brokers were applauded by the Reserve Bank of Australia, APRA and the Australian Bankers Association in their submissions to the inquiry.

Where the Royal Commission may have an impact is if it decides to look at banks’ lending policies. There is already agitation for the Commission to widen its remit and while looking at lending standards will not specifically focus on brokers, it will have impacts for the property market.

But APRA’s ongoing macro-prudential policies will have a more immediate impact.

Recent research by the Mortgage and Finance Association (MFAA) shows that brokers settled a record 55.7 per cent of all residential mortgages – this equates to $51.77 billion in the last quarter.

It is precisely because mortgage broking has been so successful that it has been subject to scrutiny. But, to date, these enquiries show the industry is in good shape.

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