Prime Minister Scott Morrison has reached out to mortgage brokers across the country warning them a Bill Shorten-led government would deliver a significant blow to their industry.
Mr Morrison wrote in a letter to the sector the Labor Party would inflict damaging policies recommended by Kenneth Hayne QC in his banking royal commission final report. He also warned that if the opposition claims victory at next month’s federal election it would “accelerate the slowdown” in the property market.
The letter was signed by both Mr Morrison and Treasurer Josh Frydenberg, The Australian reports.
“Labor will end trail commissions and hit the mortgage broker industry,” it said.
“Mortgage brokers are critically important for competition and delivering better consumer outcomes in the mortgage market.
“There are 16,000 mortgage brokers across Australia — many of which are small businesses — employing more than 27,000 people. The Government wants to see more mortgage brokers — not less.”
A relentless campaign from the mortgage broker industry contesting Mr Hayne’s recommendation to implement a sweeping ban on commissions eventually wore the Government down.
Initially, banks were to be banned from paying mortgage brokers so-called “trail commissions” on new loans from the middle of next year, a payment structure described by Mr Hayne as “money for nothing”.
But, last month, Treasurer Frydenberg delayed those plans by pushing a review on the payments back until 2022.
If Mr Morrison reclaims his position at the election, the issue will be reviewed in three years by the Australian Competition and Consumer Commission and the Council of Financial Regulators.
The Labor Party, however, intends to go through with the initial plan to scrap the payment structure, as detailed in the letter sent to mortgage brokers from the Prime Minister and the Treasurer.
“The Labor Party want to prohibit trail commissions and introduce a fee capped at 1.1 per cent of the value of a loan, which will mean you won’t get properly compensated for the value you add to your clients,” the letter published by The Australian says.
“Labor also proposes to end negative gearing as we know it and increase Capital Gains Tax by 50 per cent. Labor’s housing tax will lower home values, increase rents and accelerate the slowdown in the property market.
“These proposals would have a detrimental impact on mortgage brokers and real estate professionals like yourself and your clients.”
“We are concerned about reports that Labor is refusing to listen to those affected, or those with expertise (such as yourself), who understand the risks.
“Unlike Labor, we support you and your industry.”