Bowen now says Labor will force “fixed-rate broker commissions”

The Royal Commission recommended the banning of all forms of broker commissions to make way for the shift to a user-pays model [but] would only benefit big banks and destroy competition.

Initially, Labor pledged to follow ALL the recommendations [but is now] proposing a flat commission rate of 1.1% of the property loan instead of a consumer-pays model.

[Bowen’s gobbledegook:]
‘We do want to see conflicted remuneration taken out of mortgage broking, but we do recognise that upfront commissions will play a role to take the financial pressure off customers’, Bowen said.

[Ed. Clearly, the would-be treasurer has no idea how business works]

Bowen said with the flat-fee structure, banks will not be able to encourage brokers to prioritise selling their own mortgages, avoiding conflict of interest.

[Ed. But what about other aspects of the package? Early payment penalties. Insurance. Redraw facilities. Loan portability. etc etc]

‘We have a different way of fixing that problem, and we do so very openly and transparently, waiting for an election to give the Australian people plenty of notice of our intentions and the mortgage broking sector the clear transparency of our approach’.

[Ed. He isn’t fixing any problem, he is creating one]

Aussie Home Loans CEO James Symond said that Labor’s change of heart was recognition of the potential problems the shift to a consumer-pays model would cause.

Treasurer Josh Frydenberg said Labor’s policy is ‘one of the most humiliating back-downs in recent memory’.

‘It’s a day of humiliation for Chris Bowen and Clare O’Neil after telling all Australians that they will implement every single recommendation of Mr Hayne and that all commissions from mortgage brokers should go’.

Source: Will fixed-rate broker commissions work? | Your Mortgage Australia

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