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Frydenberg’s trail commission ruling welcome news for the industry

14 March 2019 Tim Neary

Mortgage Choice has said that the government’s decision to maintain trail commissions on new loans and undertake a review in three years is welcome news for the industry.

Treasurer Josh Frydenberg said that the abolition of trail won’t proceed in 2020 because the government is concerned about the adverse effect on competition in the mortgage lending market. He also conceded that abolishing trail would be “a free kick to the banks”.

He said the government will review trailing commissions and the feasibility of continuing upfront commission payments in three years’ time.

Mortgage Choice CEO Susan Mitchell said that she “wholeheartedly” supports the announcement.


“It is clear that abolishing trail would have an adverse effect on the home lending market and would be detrimental to competition.

“Australia’s 17,000 mortgage brokers will applaud the government’s common sense decision to keep trail commissions. ASIC’s 2017 Review of Mortgage Broking Remuneration Report did not identify trail commissions as directly leading to poor consumer outcomes, nor recommend the removal of trail commissions.”

She said the figures speak for themselves.

“The latest data shows that 59.1 per cent of home loans originate through the mortgage broking channel, yet Australian Financial Complaints Authority (AFCA) data for the month of November 2018 revealed that of 6,522 complaints against financial service providers, only 29 related to mortgage brokers. This is less than half of 1 per cent of reported complaints.

“Furthermore, brokers drive competition in the lending market. Proof of this can be seen in Mortgage Choice residential settlement figures, which show that, in the past two years, the big four banks have lost 10 per cent of market share to smaller lenders.”

Frydenberg’s trail commission ruling welcome news for the industry
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