Election result 2019: delivering more certainty for our industry

May 27th, 2019

The 18 May election result was a good one for the mortgage broking industry. The return of the Coalition Government represents political certainty when we need it the most. Last week, we hosted a webinar to discuss the key implications for you and your broking business.

If you missed the webinar, click here.

In the lead up to the election, Connective was in productive discussions with both sides of politics, and we are pleased to see the policies we’ve been advocating for were more wholly endorsed by the Coalition. The most immediate upshot for our industry is that for the next three years at least, trail commissions will remain intact.

That said, there’s more work to be done to secure our industry and position it for growth. Connective, together with the MFAA, FBAA and the Combined Industry Forum (CIF), continues to play an active role in a number of key areas. The good news is that we’re now doing so in the knowledge that, for the next three years at least, we’re dealing with a known political quantity.

More changes ahead – and what Connective is doing

The new Government is committed to rolling out all but one of the Royal Commission recommendations, and the impact of other reviews and potential changes to our industry must also be anticipated and addressed. Some of the more significant areas that we’ll be keeping an eye on – and keeping our broker networks informed about – include:

• Best Interest Duty. Debate is continuing on exactly what Best Interest Duty should look like for brokers in the light of the Hayne recommendations that it be placed level with that of financial planners. Connective is firmly of the view that different standards should apply between Financial Planners and Mortgage Brokers, reflecting the different levels of complexity of the respective roles.
• Clawbacks. Brokers and the wider industry are already on notice that clawbacks are a reality. We all know that unforeseen circumstances can cause loans to be prepaid or refinanced, so now more than ever brokers should be taking every step possible to understand their customers’ position to ensure that, at least when you set up the loan, there’s no foreseeable reason it won’t hit the two-year mark. For our part, it’s Connective’s role to make sure the final policy position is fair and equitable for brokers.
• First Home Loan Deposit Scheme. As the detail of the scheme becomes clearer we will keep you updated on its impact on brokers and the housing market.
• APRA and ASIC activity. We are working with ASIC on Responsible Lending Conduct and with APRA on changing serviceability limits to shape a more standard and accepted Household Expenditure Measure (HEM).
• Sedgwick Report. In the wake of the election and Royal Commission, we have strong views on avoiding the potential confusion and contradiction caused by trying to adhere to multiple different sets of recommendations. Sedgwick recommendation 18, which suggests decoupling commission size from loan size, is one example that will see us making strong representations for certainty by retaining the status quo.

In addition to direct lobbying, our primary commitment is keeping brokers abreast of these changes and, most of all, offering practical tools and guidance both to support compliance and to help strengthen and diversify your businesses.

The future is bright – but more work is still required

While the election is now behind us and there is greater clarity on policies related to our sector, it is important to remember that there is still plenty of work to do and that we need to keep up the good work.

While we are pleased that the election result supports our sector, we must remember that doing the right thing by customers should remain our primary focus. That means maintaining regular contact with your customers, explaining the services you offer and providing transparency and documentation of your remuneration. .

Our future is bright, but if we are to keep it that way, we need to keep the light shining on everything we do.