Broker group Finsure says if some of the recommendations from the Hayne Royal Commission are brought in it will set the Australian home loan market back 30 years because it will give the banks more power.
Managing director John Kolenda said the recommendation to remove trail commissions for brokers without any industry consultation was confusing seeing the impact brokers have had on the industry since entering and the fact they write nearly 60 per cent of home loans in Australia.
“We are fully committed to protecting consumer outcomes, our brokers and the industry,” he told Broker News.
“If Commissioner Hayne had bothered to ask, he would have heard that brokers have been pivotal in driving competition and transferring the power away from the major banks towards the smaller banks, regional banks and non-bank lenders, providing more options for consumers.”
“But any drastic change to overall remuneration economics will put the market back 30 years and see consumers paying significantly more each month.”
Mr Kolenda told Broker News that unfortunately the Hayne Royal Commission had in some ways made the lending environment more complicated and confusing, and thanks to tighter restrictions it had led to reduced borrowing power for consumers.
“We have seen a dramatic reduction in borrowing capacity for consumers with many being disheartened by the scrutiny of the major banks in analysing their expenses,” he said.
“The average consumer qualifies to borrow 20 per cent less now than six months ago and the criteria varies drastically across the lending landscape,” he told Broker News.
“The biggest hit are the SMEs, who are finding it extremely difficult to borrow any money and are reverting to paying much higher rates from private lenders in order to survive.”
Mr Kolenda said high profile economic commentators were speaking out against the Hayne recommendations that involved mortgage brokers.
It seems the debate has plenty of miles left before it runs its full course.