Reports that ASIC’s remuneration review is an opportunity for finance and mortgage brokers to self-regulate have been strongly criticised as being way off the mark by the Finance Brokers Association of Australia (FBAA).
Executive director Peter White said the industry is regulated by ASIC, and as such, can never truly self-regulate.
“For true self-regulation to exist, one needs to formulate the rules, write them and then police them without external influence,” he said.
“In the case of ASIC’s REM review, the industry can have input and offer guidance on possible measures and outcomes, but the decision is made by the minister through Treasury and ASIC then polices those outcomes.”
Mr White said industry bodies, such as the FBAA, provide some self-regulation, pointing out that the association has had internal dispute resolution processes available to members for well over ten years.
He revealed the FBAA process has just been authorised by the ACCC as a formal disciplinary tribunal that has greater powers and reaches across all finance segments, to “ensure the right outcomes are achieved from any dispute against a member”.
However, this tribunal doesn’t replace other dispute resolution processes, the ombudsman, courts, or ASIC’s powers, and “it certainly does not constitute true self-regulation”.
“It is also important during this ASIC and Treasury REM consultation process that over eagerness doesn’t cause us to throw the baby out with the bath water.”
As part of the association’s response to Report 516 (the REM Review) in relation to Proposal 1 (improving the standard commission model), the FBAA has taken a strong stance in not supporting any changes to commission structures that injure the broking profession and deliver no consumer benefits.
“As an industry association, we need to be extremely careful how things impact commercial arrangements, as we cannot make such considerations on behalf of our members.
“However, as we know, ASIC believes there needs to be some tweaking so we need to carefully tread this path without rushing into making poor decisions that impact people’s lives.”