Mortgage brokers are now set to be included in the terms of reference of the banking royal commission.
The lead commissioner Kenneth Hayne QC has told the inquiry it will include the mortgage broking industry after consultation with the Federal Government.
The royal commission will now include intermediaries between borrowers and lenders where originally it was to look at just authorised deposit-taking institutions, banks, insurers, holders of Australian Financial Services licences and registrable superannuation entity licences.
The mortgage broking sector is responsible for more than half of every mortgage written in Australia and it surprised some in the industry when it was left out of the original terms of reference.
Mortgage and Finance Association’s Mike Felton told the Australian Financial Review that the mortgage broking industry has made a lot of progress in its professional development.
“WE have had two significant reviews in the past 18 months,” he said.
“Neither of these found systemic poor outcomes or systemic harm to consumers, which I believe will stand us in good stead, regardless of the direction the royal commission takes.”
Mortgage Choice CEO John Flavell said he was surprised the mortgage broking industry wasn’t included in the first place.
“Anything it could do to strengthen that offering would make sense,” he told Australian Financial Review.
“The challenge with any sort of regulatory change is that if you are adding some new rigour to the process, you want to make sure you are getting commensurate improvement in outcomes.”
Time will tell if outcomes for the mortgage broking industry will be improved after now being included in the banking royal commission.