The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was announced on 30 November 2017 and formally established on 14 December 2017. Commissioner Kenneth Hayne was tasked to provide an interim report to the Government by 30 September 2018 and a final report by 1 February 2019.
All up there were seven rounds of Royal Commission hearings running from 13 March 2018 to 30 November 2018 which focussed on topics including consumer lending practices within the context of credit products such as home loans, car loans and credit cards, and loans to small and medium enterprises.
Stakeholders called to appear before the Commission were subject to questioning about misconduct, and about instances where conduct, practices, behaviour or business activities fell below community standards and expectations, according to The Royal Commission’s Terms of Reference.
As Australia's largest finance broking industry body, representing over 13,500 finance brokers, the MFAA monitored the proceedings of the Royal Commission closely, making multiple comprehensive submissions in defence of our industry.
On 4 February 2019, the Royal Commission final report was publicly released proposing a consumer fee-for-service amongst other changes to our industry.
The recommendations threatened to destroy the viability of the mortgage broker channel, which in turn would immediately reduce competition, limit access to finance – especially for those in rural and regional areas – and drive customers back into the branches of the banks with the largest branch networks.
The MFAA immediately released a statement condemning the recommendations, labelling a customer fee-for-service as a multi-thousand-dollar tax on borrowing that would damage competition and access to credit and entrench bank power.
The Association also took a strong stance in opposing the recommendation to abolish trail commissions.
Just two days later, on 6 February, the MFAA activated the Don’t Kill Competition campaign, an integrated national advertising and advocacy campaign of public relations, government advocacy, mass media and digital advertising, and grassroots customer activation developed over previous months, with the support of a coalition of industry partners, to defend the industry.
The Don’t Kill Competition campaign was designed to show consumers and politicians what a world without mortgage brokers would look like. The campaign comprised advertising across newspapers, radio, billboards, television and digital platforms and demonstrated that banning commissions would be a great outcome for large lenders with branch networks, but a terrible outcome for everyday Australians.
The campaign featured a microsite at www.brokerbehindyou.com.au that provided both brokers and consumers with templates of letters to send to their local Member of Parliament to show their support.
As the Don’t Kill Competition campaign took effect, the industry continued to pull together like never before, attracting significant media attention as we explained the disastrous impact that implementation of the Royal Commission recommendations would have on our industry and Australian home buyers.
MFAA CEO Mike Felton undertook a media blitz in defence of the industry, holding countless conversations and interviews with journalists across print and broadcast outlets, to explain to them why the recommendations would be disastrous for competition and consumer outcomes, while also engaging with Government, Opposition and Independent political representatives.
The Don’t Kill Competition campaign was well received and attracted considerable support, including from brokers and consumers who sent over 30,000 emails to their local MPs in support of the channel.
After providing in-principle support for all 76 Royal Commission recommendations, on 22 February 2019 the Opposition announced they would not legislate a customer fee-for-service should they win Government at the May 2019 election, and committed to a fixed 1.1 per cent flat, upfront commission, and the prohibition of trail commission on new loans from 1 July 2020.
Despite also providing in-principle support to all 76 recommendations, on 12 March 2019 the Coalition Government announced, if re-elected, it would maintain mortgage broker trail commission and up-front commission and instead review the commission arrangements in 2022.
The MFAA welcomed these announcements and continued to engage brokers, customers, all sides of politics, the media and decision makers within Treasury right up until caretaker mode took effect leading into the Federal Election on 18 May 2019 when the Coalition Government was re-elected for a third term.
The MFAA is working collaboratively with the Government as we continue to progress the Combined Industry Forum’s package of reforms in response to ASIC’s Broker Remuneration Review.
We are also working with Treasury to further progress our advocacy for the interests of our industry – and of Australian home buyers – in response to the recommendations of the Hayne Royal Commission, and help Government create an environment in which the customer comes first, without destroying competition in the sector and handing power back to the major lenders.
Royal Commission – MFAA February 2018 Submission
View the MFAA's initial submission to the Royal Commission (23 February 2018) here.
Royal Commission Interim Report - MFAA October 2018 Submission
View the MFAA's response to the Royal Commission's Interim Report (26 October 2018) here.
View Don’t Kill Competition campaign material, including online interviews, in the media here.
For more information on The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, visit the Commission’s website here.