After a productive period of consultation, advocacy and negotiation, the MFAA welcomes the release of the final regulations from Treasury that will govern mortgage broker remuneration into the future.
Yesterday, Treasury released its Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers) (Mortgage Brokers) Regulations 2020 and the related Explanatory Statement in support of the legislation that commences 1 January 2021.
These docments represent the finalisation of the Regulations and Explanatory Statement first released in August 2019, which primarily deal with the Government’s response to the remuneration changes proposed under Royal Commission recommendation 1.3, which required amended legislation to address conflicted remuneration for mortgage brokers.
In essence, these new regulations clarify which benefits received by mortgage brokers are to be considered conflicted remuneration, and provide guidance on when conflicted remuneration must not be accepted or given. They also address a series of other complex issues related to remuneration.
The finalisation of the Regulations and Explanatory Statement follows a lengthy period of consultation during which both the MFAA and the Combined Industry Forum (CIF) made every possible use of the multiple opportunities given to provide input into the Regulations.
The Government’s commitment to consultation – and ongoing engagement – has once again demonstrated their recognition of the importance of the mortgage broking industry, and their commitment to develop legislation, associated regulations and supporting documents that are appropriate for the industry.
The final Regulations and Explanatory Statement are available here to review.
When the initial drafts of the Regulations and Explanatory Statement were first released last year, we noted a number of key issues which we brought to the attention of Treasury and Government. After working through these issues over the past year, we are pleased with the overall outcome on these matters.
For a summary of the initial key issues identified and their final status in the Regulations and Explanatory Statement released yesterday.
As you can see from the table, we have achieved a positive outcome on the majority of the key issues regarding remuneration.
At all times throughout this process, our goal has been threefold:
• Minimise potential for unintended consequences for customers and brokers, and ensure legislation and regulations carry out the intent of Government’s stated objectives.
• Ensure the regulations provide maximum clarity to mortgage brokers to limit potential for misunderstanding of obligations by brokers.
• Assist Government in protecting competition, choice and access to credit for consumers – and by doing so, ensure the best possible outcomes for consumers.
By maintaining our focus on these key priorities, we have assisted to shape legislation and regulations that will result in even greater differentiation, trust and confidence for the mortgage broker channel, and protect consumer outcomes and our remuneration structures as we work towards the impending review of mortgage broker remuneration by the Council of Financial Regulators and the ACCC in 2022.
This is a significant milestone for our industry, and one that reflects both the maturity and professionalism of mortgage broking, but also the importance of our industry to our economy.
My thanks again to all of you who assisted and consulted with the Association over the past 12 months as we worked through a very comprehensive and complex process.
I believe we can now look with confidence and certainty towards 2022 and beyond, as our industry continues to drive increased market share, based on ever-growing consumer confidence.
Chief Executive Office
Mortgage& Finance Association of Australia (MFAA)