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Australian Labor makes commission U-turn

Australian advisers have received an unlikely boost in their fight against remuneration reforms proposed by the Royal Commission. The Australian Labor Party has withdrawn its support for a fee-for-service model and has instead proposed a flat, lender-funded fee.

Friday, February 22nd 2019, 1:59PM

The opposition party previously indicated it would agree with all of the recommendations from Kenneth Hayne's Royal Commission report.

The Royal Commission final report called for a fee-for-service model paid for by customers, a ban on trail commission, and a broad ban on other forms of commission. Hayne's call to ban trail commission is set to come into effect next year.

Labor's decision to oppose a fee-for-service model is politically significant, and aligns with the country's Liberal party. A move to ban all commission is now unlikely to pass through parliament. Labor said it changed its mind after reviewing guidance from the Productivity Commission, which warned a fee-for-service model would hurt competition. 

The U-turn comes after the Australian broking industry launched a fierce campaign against reforms. Major broking groups including Loan Market encouraged customers to petition the government, while industry body the MFAA rolled out a national advertising campaign. The adviser industry believes a fee-for-service model will drive customers direct to their bank.

Labor still supports a ban on trail, but wants lenders to pay brokers an flat, upfront commission. Labor believes the fee will stop lenders and advisers pushing over-sized loans. It wants to introduce a capped commission rate of 1.1%.

In a statement today, Labor's Shadow Treasurer Chris Bowen also called for commission clawbacks to be limited to two years, and added the party supports a ban on other "incentives" from lenders to advisers.

Labor's softened position could prompt other political parties to re-assess their implementation of the Hayne report. Scott Morrison, Prime Minister of Australia's Liberal-National coalition, and Treasurer Josh Frydenberg have expressed reservations about the validity of a fee-for-service model. 

 

 

 

 

Tags: Royal Commission

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Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.45 4.49 4.69
ANZ Special - 3.95 3.99 4.19
ASB Bank 5.80 4.49 4.49 4.45
ASB Bank Special - 4.09 3.99 3.95
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.05 3.99 3.95
BNZ - Std, FlyBuys 5.90 4.69 4.59 4.79
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.70 4.85 -
Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 3.99 4.39
HSBC Premier LVR > 80% - - - -
HSBC Special - 3.69 3.69 3.95
Lender Flt 1yr 2yr 3yr
ICBC 5.79 3.99 3.99 4.49
Kiwibank 5.80 4.80 4.94 4.84
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.05 3.99 4.09
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.46 4.69
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 5.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.05 3.99 4.49
Sovereign 5.90 4.49 4.49 4.45
Sovereign Special - 4.09 3.99 3.95
The Co-operative Bank - Owner Occ 5.75 3.99 4.15 4.35
The Co-operative Bank - Standard 5.75 4.49 4.65 4.85
TSB Bank 5.80 4.55 4.49 4.65
TSB Special - 4.05 3.99 4.15
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.69 4.79 5.19
Westpac - Offset 5.95 - - -
Westpac Special - 4.05 3.99 3.95
Median 5.89 4.49 4.49 4.47

Last updated: 17 April 2019 8:49am

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