Royal Commission backfires on mortgage broker reform: Pete Wargent
EXPERT OBSERVER
Labor's Bowen and Shorten had insisted they'd adopt all of the Royal Commission recommendations sight unseen - a pretty much ill-advised idea when you think about it - ostensibly because they wanted to be seen as 'tough' on the banks, but just as likely to put pressure on the government to clamp down on lending and credit further.
What the ALP think-tanks hadn't foreseen is the major banks getting off relatively lightly and some cataclysmic reforms recommended for the mortgage broking industry, especially in terms of commission structure.
The initial reaction from Bowen, on his Twitter feed, seemed to misread the mood:
My view is that overwhelmingly brokers add value to consumers, and help borrowers to navigate the maze.
Some of the information put forward by the banks during the hearings was misguided at best, misleading at worst.
Although naturally a 'best interest' test must be enforced, the existing model is superior to a potential fee-for-service alternative.