Aussie politician hints at support for trail
An Australian parliamentary committee has indicated its support for trail commission, as politicians review the future of adviser remuneration.
Wednesday, July 1st 2020, 4:30PM
On June 29, Australia's House of Representatives standing committee on economics announced that it would look into mortgage advice industry in a new hearing.
It follows the Royal Commission into the financial services sector from commissioner Kenneth Hayne, published in February last year. The 2019 Hayne Report suggested remuneration-based commission should be scrapped.
The Australian government did not implement Hayne's recommendations on commission, and has promised to review trail over the next two years.
The new committee hearings debated the merits of trail this week, and the chair spoke in favour of maintaining the current commission model.
Liberal MP Tim Wilson said: "I actually think Hayne got it wrong on mortgage brokers and trailing commissions.”
Australia's broking trade body, the MFAA, was also in attendance. MFAA chief executive Mike Felton (pictured), said previous inquiries by the Australian Securities and Investments Commission did not recommend the end of trail.
"They did not find it directly leading to poor outcomes and, in fact, they went as far as to say that trail incentivises higher quality loans," Felton said.
"A similar sentiment was expressed by Treasury, saying that conflicts in the absence of trail and clawback would be worsened, again highlighting the control mechanism that exists within trail," Felton added.
Felton warned a ban on trail would "challenge the viability of the important mortgage broking industry that drives competition and access to credit".
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