On 3 August, the Government released the Productivity Commission Inquiry Report on competition in the Australian financial system. An overview was also released, highlighting the findings and recommendations.
The report considers the provision of financial services and the interaction of market participants, issues facing the consumers of financial services and the functions and activities of the regulators.
Among other recommendations, the Productivity Commission recommends the introduction of a best interest obligation for all providers in the home loans market — whether as a lender or mortgage broker — who interact directly with consumers seeking a home loan. The proposed obligation is intended to build on the existing regulatory framework in the National Consumer Credit Protection Act 2009 (Cth), which governs the licensing and conduct regime that applies to providers in the credit market. Further, Productivity Commission recommends that, to reduce conflicts of interest, trail commissions should be banned and clawback of commissions from mortgage brokers be restricted.