The federal government has ditched a key recommendation from the banking royal commission to scrap trail commissions for new loans arranged by mortgage brokers | sdanck
The federal government has ditched a key recommendation from the banking royal commission to scrap trail commissions for new loans arranged by mortgage brokers after pressure from the industry and smaller lenders.
Federal Treasurer Josh Frydenberg has dumped a key recommendation from the Hayne royal commission regarding broker pay.Commissions paid to mortgage brokers was one of the key focus areas for the royal commission, with commissioner Kenneth Hayne recommending in his final report that commissions to brokers be axed and replaced by an upfront fee.
"It is also backed by commentary from both ASIC and the Treasury that suggests that consumer outcomes could in fact be worsened in the absence of trail with the possibility of increased churn, reduced quality and heightened conflicts." Labor has pledged to abolish trail commissions if it wins government and instead allow brokers to charge an upfront fee, which is expected to be about 1.1 per cent of the loan.
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