The Finance Brokers Association of Australia (FBAA) has taken aim at consumer group Choice for trying to influence the Banking Royal Commission to bring up issues that have been dealt with in the past.
Choice has urged the commission to scrutinise trail commissions and how they affect consumer outcomes.
“The FBAA has commented on this and proposed discussions with the commission, and this repeated supposed issue simply isn’t an issue,” said executive director Peter White.
“It is widely known and repeatedly commented on in the media, and to regulators and government, that trail commission is paid for multiple reasons that all support good consumer outcomes.”
Mr White said it is partly to minimise inappropriate churn of loan portfolios which may not be in the borrowers’ best interests, but also for the broker to service any queries from the borrower.
“Brokers already review all the loans within their portfolio annually to ensure their loans have not become unsuitable for the borrower due to any changes in their personal circumstances,” he added.
“It’s an ongoing job that lenders would not usually do.”
Mr White said Choice needs to remember they were part of a mortgage brokerage ‘One Big Switch’ to encourage borrowers to change lenders so they in turn could earn a commission.
One Big Switch launched in Australia in July 2011 with the Choice Big Bank Switch, a campaign to cut the cost of mortgages using the power of group switching. 40,000 Australian consumers took part https://www.onebigswitch.com.au/about-us
“Strange how it was and is good for them, but not for the greater broker space. Somewhat hypocritical I feel,” he said.