ASIC undertook an industry-wide review of mortgage broker remuneration. On 16 March 2017, ASIC released its Final Report which found that the current mortgage broker remuneration and ownership structures create conflicts of interest that may contribute to poor consumer outcomes.
The Report outlines a number of proposals for industry aimed at improving consumer outcomes, including:
- improving the standard commission model for mortgage brokers;
- moving away from bonus commissions and soft-dollar benefits;
- increasing the disclosure of mortgage broker ownership structures; and
- improving the oversight of mortgage brokers by lenders and aggregators.
ASIC's key recommendations will likely spell the end of volume-based incentives, which may have the potential to encourage mortgage brokers to lend more than necessary in order to meet loan volume targets.
These recommendations may form the basis for voluntary industry reform.