A deep dive into the ComCom report and what it means for mortgage advisers

The Commerce Commission's final report into competition in personal banking services sector unsurprisingly concluded that the dominance of the four large Australian-owned banks has led to a lack of effective competition and excess profits.

The Commission makes a series of wide-ranging recommendations to improve competition. The Government has pledged to implement them. The recommendations, once implemented, will have a significant impact on mortgage advisers, their financial advice providers (FAPs) and aggregators.

Mortgage adviser recommendations
The recommendations specifically in relation to mortgage advice are intended to increase competition, by allowing customers to access better information and mortgage offers from more lenders. Those recommendations are:

1. Standardised offers: Home loan providers should present offers in a readily comparable manner, accounting specifically for the effective value of cash contributions
2. Pro-rata clawbacks: Home loan providers should pro-rate all clawbacks for mortgage adviser commissions and bank cash contributions
3. Streamlined bank processes: Banks must improve their processes, to make it easier for mortgage advisers to submit multiple applications, and to more quickly process loan applications
4. Ban on conversion rate conditions: Banks should ensure that “conversion rate” targets for mortgage advisers are not discouraging mortgage advisers from submitting qualifying home loan applications to multiple lenders
5. Lender panel disclosure: Financial advisers must highlight which lenders are not on their panel of lenders
6. Superior headline rates highlighted:  Financial advisers must identify any superior headline interest rates offered by lenders outside of their panel
7. Multiple offers presented: Where possible, advisers should present at least three actual offers to their clients