The findings of the Royal Commission into the banking and financial services sector is expected to turn the finance industry on its head with fears of interest rate rises following a ban on broker commissions.
Scottish Pacific CEO Peter Langham said that adding a broker fee for service would be detrimental to small business owners seeking finance.
“While the Royal Commission recommendations focus on residential brokers, we are concerned about the impact this will have on the viability of the whole broker sector and consequently on small and medium business owners,” he said
“Brokers play a major role in putting non-bank lending alternatives to their clients, providing real solutions for business owners when the banks can’t or won’t lend to them.
“Brokers have helped drive lending competition and increased the visibility of non-bank lenders. Australia’s ability to provide diverse lending options for consumers and SMEs could go backwards if the fee for service is implemented.”
However, Finance Brokers Association of Australia managing director, Peter White, said he was not expecting a massive shake up of the industry.
“The Royal Commission is about the greed of the big banks and insurance companies, and so it should be because their behaviour has been appalling,” he said.
“The broking sector was well ahead of the game, as we’ve already been through reviews from ASIC and the Productivity Commission. Before the Royal Commission was established we changed a number of practices in the interests of openness and transparency.”
He said customers trusted brokers far more than the banks.
MinterEllison Partner and Financial Services Industry leader Rahoul Chowdry welcomed the final report as an opportunity for banks and other financial institutions to rebuild trust with their customers.
“The recommendations are thoughtful, balanced and provide an opportunity for our financial institutions to not only address the symptoms, but also the root causes. In many cases, this will involve robust attention to acting in the best interests of customers and our communities whilst balancing commercial outcomes.”
Fintech startup, Roll-it Super, founder and CEO Mark MacLeod said change was coming and it was not just going to impact the big banks.