Financing Australia's Future
The Australian Finance Industry Association (AFIA) is the leading industry advocate for Australia’s finance sector. AFIA represents more than 100 providers of a consumer, commercial or wholesale finance that operate across Australia.
Our members provide the finance that Australian families, business and large corporate entities need to operate and grow.
Formerly known as the Australian Finance Conference, AFIA supports the businesses and brands that enable Australians to achieve success by Financing Australia’s Future.
Mortgage broking industry takes lead on good customer outcomes
Monday, 11 December 2017
Representatives of Australia’s mortgage broking industry have prepared a landmark reform package that will improve consumer outcomes and confidence in mortgage broking.
The reform package is the result of unprecedented engagement between industry bodies, lenders, mortgage brokers and their representatives, aggregators, introducers, and consumer groups, who have worked together since May 2017 as the Combined Industry Forum, and follows consultation with regulators and Federal Government.
The industry has agreed on six principles that will be implemented to ensure better consumer outcomes and improved standards of conduct and culture, while preserving competition in mortgage broking:
- The standard commission model will avoid financial incentives that encourage consumers to borrow more than they need or will use, for example by basing commissions on facility draw down net of offset;
- Volume-based and campaign-based commissions paid by lenders and aggregators are recognised as raising potential conflicts of interest and poor customer outcomes and are expected to cease;
- Non-monetary benefits will only be given based on a balanced scorecard and good customer outcomes, and benefits given by lenders will be capped;
- Ownership models and commercial relationships will be made clear on all marketing materials, including websites, where ownership is greater than 20 per cent, so consumers have the right information to make informed choices;
- ASIC and consumers will be given clearer information on where loans are written, commissions paid and interest rates, to increase transparency and accountability in the industry;
- The industry will introduce an improved Governance Framework that monitors for, and identifies risks, and requires the industry to take action and continuously improve where issues are identified.
A copy of the joint industry media release can be accessed here.