​The MFAA is concerned about Treasury's latest proposed ASIC Industry Funding Model and wishes to provide you with an overview of recent developments. 

​​The proposed changes would see licensed mortgage brokers and broker groups paying up to seven times the amount for each dollar of credit facilitated compared to lenders. This has occurred despite the fact that brokers and broker groups hold inherently lower levels of risk than lenders.

We believe that this equates to a 'tax' on brokers. Unlike lenders, brokers are - in most cases - unable to pass this additional cost on down the value chain.

Under ASIC's current proposal, licensed brokers and broker groups (credit assistance providers) will face a levy rate of $1,000 plus $1.14 per $10,000 on credit intermediated greater than $100m, compared to $2,000 plus $0.15 per $10,000 facilitated for lenders on credit provided greater than $100m.

On ASIC's current calculations this could leave licensed brokers and aggregators (where applicable) each out of pocket in the amount of $39.90 on an average $350k mortgage given that the levy is charged at multiple points in the value chain. Lenders would be levied $5.25 on the same average $350k transaction.

These amounts are only payable when a relevant party has reached the $100m threshold which may not affect a number of brokers directly, however aggregators will be impacted and it is possible they will want brokers to participate in carrying a portion of this cost.

Overall, the MFAA believes that the model currently under consideration is inequitable, anticompetitive and unnecessarily complex to administer.

It also favours balance sheet lending over securitisation, disadvantaging the vast majority of smaller lenders.

It could also have many unintended consequences, including the consolidation of licensing. Many individually-licensed brokers may hand back their licence and join broker groups to avoid these disproportionate new licensing costs, which would reduce industry competition.

The MFAA is currently working with members and other industry participants to develop an alternative model based on the following four principles: simplicity, equity, achievability and neutrality.

This is a complex task especially given the number of other regulatory issues the industry is currently involved in. 

We believe this is an issue to which all 17,000 mortgage brokers and their broking groups should pay particular attention. We will continue to update you with any significant future developments.