Mortgage brokers say mental health concerns are springing up across their industry in the wake of the banking royal commission final report.
With an overhaul of the way brokers are remunerated on the horizon, some brokers say they’re facing having to close their businesses and switch careers.
National Australia Bank (NAB) has set up a mental health hotline for mortgage brokers distressed by the magnitude of the change, offering three face-to-face or over-the-phone sessions through its worker assistance program.
Independent brokers SmartCompany spoke to about the initiative offered a mixed response to the move, as debate over the reforms continues to heat up.
Sydney-based broker Rob McFadden, who last week set up a petition campaigning against the reforms which now has over 75,000 signatures, likened the hotline to “putting the fox in charge of the chook house”.
“Someone has thought they are doing the right thing, but I’m viewing the gesture very cynically,” he tells SmartCompany.
“I’d rather they jumped behind us in the push to keep commission as it is.”
Hayne recommended both trail commissions and upfront commissions paid to brokers be banned and that the industry moves to a user-pays model where consumers, rather than banks, remunerate brokers.
NAB was an early mover on broker remuneration reform even before the royal commission final report, changing the way it calculated broker commissions last September.
However, in the wake of the royal commission report, NAB’s executive general manager of broker partnerships, Anthony Waldron, has said NAB wants to be the bank that supports brokers.
Other bank bosses have been less forthcoming, with CBA chief Matt Comyn reiterating his support for the changes earlier this month.
Manly-based broker Andrew Vaughan described NAB’s hotline as a “good idea”, saying brokers are going through a difficult time.
“There are some pretty serious changes happening and you’re talking about people’s livelihoods,” he tells SmartCompany.
Last week Prime Minister Scott Morrison said he doesn’t want to see mortgage brokers “wither on the vine”, committing the government to banning trail commissions but not upfront commissions.
Labor, however, remains committed to all the royal commission’s recommendations in principle but has said it will work with mortgage brokers on reforms.
Vaughan says he’s going to wait and see what happens but is already considering his options.
“I have no doubt if the changes come in I’ll go out of business, I’ll survive on my existing trail for a while,” he says.
“They’ll have to make a decision and say: ‘Do we save the broker industry or let it die a slow painful death?’”
Vaughan says the user pays model is fundamentally flawed and is likely to lock borrowers into mortgage deals, making it more expensive to refinance.
“You’re talking about $2,000 to $3,000 to a broker and $1,000 in switching costs, so you’ve got a $4,000 fee to move lenders … no one will be able to afford that.”
CHOICE chief executive Alan Kirkland is a proponent of the changes and penned a blog post yesterday claiming the broking industry has lobbied its way out of a proposed ban on upfront commission.
“Some of Commissioner Hayne’s greatest work is in his general recommendations. Ban conflicted remuneration. Get rid of the exceptions and qualifications to the law that have allowed the problems we saw at the royal commission,” he said.
“That’s why the debate over mortgage broker remuneration is shaping up as the parliament’s greatest test. Because it’s not just about the broking industry. It’s about how we regulate the whole system. If parliament bends to industry lobbying on this issue, it will have failed to heed Hayne’s most important warning.”
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