Reform to the mortgage broking sector is urgent: Choice CEO Alan Kirkland
EXPERT OBSERVER
Today the Treasurer has outlined how the government will make sure that banks, insurers and mortgage brokers act fairly and provide services that help, rather than harm, the people they serve.
The Royal Commission was clear - Australians deserve better. We need mortgage brokers to act in the interests of their clients, banks to face real consequences when they break their promises and an end to aggressive sales cultures that leave people with products they don’t need.
We are glad that the Government has committed to move fast on key reforms like stronger professional obligations for mortgage brokers.
Reform to the mortgage broking sector is urgent. We’ve known since ASIC’s 2017 investigation that mortgage brokers fail to get their clients better interest rates and arrange riskier loans.
Forcing this sector to act in the best interest of consumers will lead to more people getting a better deal on their home loan.
The faster these reforms are legislated, the sooner consumers will be better protected from the practices revealed at the Royal Commission.
But the path to reform won’t be easy, with industry lobbyists already fighting change.
We’ve seen industry lobbyists try and water down every single reform to their sector. We saw it just this weekend with financial advice groups pushing back against new bare-minimum education standards for their profession.
Commissioner Hayne warned that industry groups would attempt to undermine the reforms he recommended by arguing for loopholes or exemptions.
The Federal Government will need to stand strong against industry pressure to ensure that the Royal Commission recommendations are implemented effectively.
Ensuring that the financial sector lives up to community expectations was a major focus of the Royal Commission.
The community expects the Government to stand up for the rights of customers and today is a good start.
The only way to solve the problems uncovered in the Banking Royal Commission is to make sure these reforms are passed as intended, as rapidly as possible.
Alan Kirkland is the CEO of Choice, a leading consumer advocacy group.
